Shareholders Prone to OK Closure at Handyman

“60% Off” sale signs posted at Handyman’s San Diego home improvement stores are likely to be replaced with “store closed” signs after an extraordinary shareholders’ meeting Thursday in St. Louis.
Shareholders are expected to approve a board proposal to liquidate the company, a move that would take Handyman’s stock value to an estimated $47.11. Just three months ago, the stock was trading at $22 a share.
Board members proposed liquidation, which should be completed by the end of the year to take advantage of tax breaks, as Handyman, while profitable, was unable to keep up with “significant changes” in the highly competitive home improvement industry.
Despite a $17.3 million store modernization program, increasing competition has “adversely impacted the performance of existing stores,” according to a Handyman proxy sent to shareholders late last month.
Handyman considered strengthening its market presence by acquiring additional stores, but “the result would have been the prices charged for desirable locations…”. . . poor return on investment,” the commissioner said.
Rather than continue the battle against better-funded competitors, Handyman board members decided in September that shareholders would be better served by going into liquidation.
The sale of the assets will generate gross sales of $224 million and shareholders will earn $121.5 million — or $47.11 per share — according to proxies.
The liquidation plan provides for the creation of a liquidating trust to oversee the sale of the assets. The Trust also ensures that shareholders benefit from favorable tax provisions that will be eliminated as a result of federal tax reform on January 1st.
However, some Handyman stores will likely remain open after the board meeting.
Handyman Vice President Steven M. Babin and retired Vice President Norman Fox are reportedly continuing to negotiate the purchase of some Handyman stores. Fox and Handyman declined to comment on those talks Monday.
Handyman President Harvey W. Rosen’s bid to buy several stores fell through because he was unable to obtain financing, the commissioner said.
Handyman’s retail space and leases are being acquired by competitors and other types of retail businesses. For example, Handyman sold seven of its Northern California retail stores to Circuit City in late November. The home appliance and electronics retail chain also negotiated the acquisition of three additional Handyman locations.
Though Handyman will no longer exist as a public company if shareholders approve the liquidation Thursday, it could take up to three years to complete the sale of the assets.
Handyman, which operates 53 retail stores, four distribution centers and an administrative office in San Diego, was incorporated in June 1985. Prior to the IPO, Handyman was a wholly owned subsidiary of Edison Brothers, a St. Louis-based retail company. The first store opened in 1962.