April 3, 2014 / 2:46 PM / 4 years ago

REFILE-UPDATE 1-Spencer Spirit to buy Brookstone as part of bankruptcy plan

(Corrects spelling of Spirit in paragraph four)

April 3 (Reuters) - Retailer Brookstone Inc said it would be bought by the owner of Spencer’s retail chain for about $147 million as part of a prepackaged bankruptcy plan.

Brookstone sells products ranging from massage chairs to bathroom slippers through stores in malls and airports across the United States and Puerto Rico.

The retailer, which has been struggling with falling sales as shoppers cut discretionary spending, filed for Chapter 11 protection on Thursday in a U.S. bankruptcy court, along with 10 of its subsidiaries.

Spencer Spirit Holdings Inc, which also owns costume retailer Spirit, will be the stalking horse bidder at Brookstone’s auction.

Spencer Spirit will receive a $3.7 million break-up fee if it is not selected as the final bidder.

A stalking horse bid serves as the minimum offer for a business, which could still be topped by others.

Brookstone, which has about $200 million in debt, will receive debtor-in-possession financing from bondholders.

The company said it would continue day-to-day operations but did not specify any operational changes it may make.

Brookstone was taken private in 2005 by a group led by Osim, Asia’s biggest maker of massage chairs, in a $445 million deal. The group included Temasek Holdings and private equity firm JW Childs Associates LP.

The case is In re: Brookstone Holdings Corp, U.S. Bankruptcy Court, District of Delaware, No:14-10752. (Reporting by Tanya Agrawal in Bangalore; Editing by Simon Jennings and Saumyadeb Chakrabarty)

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