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From Home Furnishing Business

Stanley Completes Asset Sale; Changes Name to HG Holdings

Stanley Furniture (NASDAQ: STLY) said it has completed the sale of substantially all of the company’s assets to an entity controlled by the chairman of the Vietnam Trade Alliance.

The closing of the $18.2 million deal came shortly after Stanley’s shareholders approved the sale at a special stockholders meeting.

Stanley said the purchase price consisted of $10.8 million in cash, a $7.4 million promissory note, and a 5% equity interest in the new company.

The buyer, Churchill Downs LLC, an entity formed by Vietnam Trade Alliance Chairman Walter Blocker, also assumed substantially all of Stanley’s liabilities.

Stanley said it retained approximately $800,000 in cash, its net operating loss carryforwards, and any remaining payments it receives under the Continued Dumping and Subsidy Offset Act.

The company said it does not intend to liquidate, and has changed its name to HG Holdings Inc. The company used a portion of the cash proceeds from the asset sale to pay the $1.3 million outstanding balance under its credit agreement with Wells Fargo, and estimates additional transaction costs for the asset sale of approximately $2.7 million.

The company’s board of directors will evaluate alternatives for use of the remaining cash from the sale, including the repurchase of the company’s common stock or payment of a special dividend to stockholders.

HG Holdings may also use a portion of the money to acquire non-furniture related assets that will allow the company to derive a benefit from its net operating loss carryforwards.

“We’re pleased to close this transaction and thank the many people who contributed to its successful completion,” said Stephen Hale II, chairman of the board. “The company will now be able to focus solely on evaluating alternatives for deploying its cash and potentially deriving a benefit from the company’s net operating loss carryforwards. We look forward to this next chapter in the company’s history.”

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