Big Lots Secures $725M Sale Leaseback
Two activist funds with a stake in the retailer say there remains roughly $427 million more in real estate value that can also be monetized.
COLUMBUS, OHIO—Big Lots has entered into sale and leaseback agreements with affiliates of Oak Street Real Estate Capital for the company’s distribution centers in Columbus, OH, Durant, OK, Montgomery, AL, and Tremont, PA. Gross proceeds for the transactions, which are expected to close in the company’s fiscal second quarter, are expected to be $725 million. Net proceeds are expected to be approximately $550 million.
The company plans to use the net proceeds to fully pay down its revolving credit facility and when market conditions normalize, to invest in growth initiatives and potential share repurchases.
Also, “the transactions will provide the company with significant additional liquidity to navigate the current uncertain environment, CEO Bruce Thorn says in prepared comments.
Macellum Advisors and Ancora Advisors, two activist investors that have recently taken a 11.5% stake in the retailer, say the move will not deter a proxy fight for control of the company.
They maintain that the retailer rejected a similar sale leaseback transaction last year with a credible buyer and that had it not been for the threat of a proxy contest, Big Lots’ board would have rejected entering into the sale leaseback transaction altogether. They also claim that there remains roughly $427 million more in real estate value that can also be monetized, “which the company has not disclosed to shareholders.”
The two companies have nominated nine highly qualified candidates for election to the Board ahead of the 2020 annual meeting of shareholders.