UPDATE 2-China-maker Lenox files for bankruptcy protection
(Recasts with background, details from filing, CFO comments, byline)
By Euan Rocha and Emily Chasan
NEW YORK, Nov 24 (Reuters) - Lenox Group Inc LENX.OB, a 119-old company whose high quality china has graced the tables of U.S. presidents and generations of American newlyweds, filed for Chapter 11 bankruptcy protection on Monday, citing declining revenue and a poor U.S. retail climate.
The company said it would continue its normal operations and that it plans to pursue a sale of its business through the bankruptcy process.
Lenox has conditionally agreed to sell all its assets to a new entity formed by its term lenders in exchange for a cancellation of a portion of its secured loans, the company said in a statement. However, Lenox said it remains open to better offers from other parties.
The renowned company, whose products are sold under the Lenox, Dansk, Gorham and Department 56 brand names, said it also has been battling "casual lifestyle trends" that have reduced demand for its products.
Lenox, founded by Walter Scott Lenox in 1889, manufactured the first American china to be used in the White House.
Five U.S. presidents, including Woodrow Wilson, Franklin D. Roosevelt, Harry Truman, Ronald Regan and Bill Clinton, commissioned Lenox to issue new tableware for state services.
The Lenox brand will remain and its products will continue to be sold if the lenders do acquire all of the companies' assets, Chief Financial Officer Fred Spivak said in an interview with Reuters.
Lenox and seven affiliates sought bankruptcy protection late on Sunday in the U.S. Bankruptcy Court for the Southern District of New York.
Spivak said the company's sales fell almost 10 percent in 2007, compared to a year earlier, and that the trend had continued in 2008.
"As economic conditions deteriorate, consumer confidence erodes, and discretionary spending decreases, the (company's) revenues likely could continue to suffer," Spivak said in a declaration filed with the court.
Lenox, which also manufactures collectibles, Christmas ornaments and jewelry, was also laboring under heavy debt.
In 2005, Lenox was acquired by Department 56 for about $204 million. Department 56, which has since changed its corporate name to Lenox, took on substantial debt at the time.
"As a consumer goods company, it's a very difficult position to be in," said Schuyler Carroll, a partner in the bankruptcy and restructuring group at law firm Arent Fox in New York. "Anybody that sells to consumers today is going to have a problem."
The company is also seeking approval from the court for a new $85 million debtor-in-possession financing facility provided by its current revolving lender group to allow it to continue conducting normal business without interruption.
Tabletop flatware maker Oneida filed for bankruptcy protection in 2006 because of declining revenue and mounting losses. It emerged from bankruptcy as a private company later in 2006.
Marc Pfefferle, Oneida's former chief restructuring officer, is the current chief executive of Lenox.
"In today's world, you could argue some people see electronics as more of a necessity than fine china," said Jerry Mozian, director of restructuring at consulting firm Tatum LLC. "Lenox is a well-known brand, but it's a tough market and as people pull back they pull back from things that aren't necessities."
Lenox sells most of its products through catalogs, department stores, Internet sites, and operates 30 retail stores of its own in 14 states.
The company listed the Pension Benefit Guaranty Corp as its largest unsecured creditor, with a pension liability claim of $9.97 million.
It intends to hire New York law firm Weil Gotshal & Manges to represent it during the bankruptcy, according to court papers.
Lenox expects the over-the-counter bulletin board to temporarily halt trading in its stock pending receipt of additional information on its financial condition and reorganization plans.
The company said it would cooperate in providing any such information requested by the OTC. (Reporting by Emily Chasan and Euan Rocha; Editing by Lisa Von Ahn, Toni Reinhold)
