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Stalking Horse Opportunity: Home Owners Bargain Outlet

Home Owners Bargain Outlet: Section 363 Bankruptcy Asset Sale Opportunity

Prior to filing Chapter 11 on October 25th Home Owner’s Bargain Outlet (“HOBO”) was a leading regional home improvement bargain retailer of “special buys” (goods that come from opportunistic purchases of a wide array of products primarily from brokers and a handful of regular vendors/manufacturers- including front-line buybacks, closeouts, overstocks, irregulars, package changes, and discontinued products), home improvement and home decor products.

Think of “Home Depot meets Tuesday Morning.”

Prior to its Chapter 11 filing HOBO operated seven retail locations, averaging 80,000 square feet per location, in the Chicagoland and Milwaukee metropolitan areas. HOBO’s core product categories included flooring, kitchen/bath, and furniture.

Store Locations

  1. #21 West Allis Opened: May 1996 Square Feet: 59,361 + 20,000 square foot warehouse
  2. #23 Crest Hill Opened: October 1998 Square Feet: 61,056
  3. #24 Waukegan Opened: October 1999 Square Feet: 80,160
  4. #25 Oaklawn Opened: October 2009 Square Feet: 93,165
  5. #26 Villa Park Opened: October 2008 Square Feet: 96,338
  6. #27 Milwaukee Opened: January 2005 Square Feet: 85,000

The Company also offered a variety of product lines in home decor, lawn and garden, electrical, hardware, paint and sundries, building materials and other seasonal products. 2017 revenues were approximately $80 million.

Gross Sales By Store

Year 2017 YTD 2018 thru 10/07
West Allis, WI 14,683,478 11,242,673
Forest Park, IL
(opened 8/28/2017)
3,220,671 6,935,471
Crest Hill, IL 9,409,298 6,902,694
Waukegan, IL 9,414,669 6,676,360
Oak Lawn, IL 18,027,497 12,755,271
Villa Park, IL 15,752,570 10,751,852
Milwaukee, WI 8,949,026 6,734,975
Totals 79,457,207 61,999,297

Current Situation

HOBO’s inventory and FF&E is currently being liquidated through a going out of business sales which will conclude by the end of the year, though the FF&E in HOBO’s three most profitable locations (West Allis, WI; Oak Lawn, IL; Villa Park, IL) remain available for purchase.

Assets Available for Purchase:

  1. The FF&E in the West Allis, Oak Lawn and Villa Park stores
  2. The assumption rights to any or all of the store leases
  3. Hobo’s soft assets (i.e. brand names, trademarks, customer lists, ecommerce platform, databases, other intellectual property, etc.)

The foregoing assets plus the availability of HOBO’s core management team create a unique opportunity to acquire and leverage these assets. Depending upon timing of the acquisition, there may be an opportunity to also purchase some remaining inventory.

Stalking Horse Position

HOBO is seeking a potential buyer for all of these assets. In the event a purchaser is willing to offer at least $200,000, the Debtors are willing to provide that purchaser with stalking horse status including bid protection and a break-up fee in an expedited sale process. If you are interested in discussing further, please contact Rick Rosenbloom of Fuel Break Capital Partners, Debtors’ investment banker, at rick@fuelbreakcapital.com

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The editors and editorial board of DailyDAC include preeminent restructuring and insolvency professionals, journalists, and editors. They are devoted to providing reliable and plain English education and deal intelligence about assignments, corporate bankruptcy, receiverships, out-of-court workouts an similar topics.

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