There's some interesting commentary going on over at The Blogging Nurseryman related to the Hines delisting. You guys know what's going on with stories like these better than we do sometimes.
Whats interesting is how this gives people a voice. In the past all we could do was just watch. Now people with an interest in the company can speak up! The comments will get noticed too since when you Google Hines nurseries the post comes up right under Hines own web page!
Hines Update- CEO Letter to Employees August 20, 2008 Dear Hines Employees: I am writing to you today to inform you of an important action the Company has taken, which we recently publicly announced. In order to re-align our capital structure and restructure our debt, Hines Horticulture has filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code. The chapter 11 process will allow us to gain immediate liquidity, continue operations and focus on maximizing the value of the business. The Company also announced today that we have agreed to the terms of an asset purchase agreement with Black Diamond Capital Management LLC where Black Diamond has agreed to serve as a lead bidder during the bankruptcy sale process. The asset purchase agreement is subject to a number of conditions, including completion of due diligence and financing. In addition to being the Company’s lead bidder, Black Diamond is the Company’s largest unsecured creditor, holding a majority of the Company’s 10.25% Senior Notes. Though the decision to file for protection under chapter 11 was difficult, we are pleased to have reached this agreement. We will work with our creditors and Black Diamond to exit chapter 11 as quickly as possible as a stronger, more competitive company. There are several important facts you should know about chapter 11. First and most important, Hines is continuing its operations and is not going out of business. We intend to use the chapter 11 process to reduce our debt, streamline our operations and take the steps necessary to ensure our long-term financial health. Our goal is to preserve and strengthen our business so that we can compete successfully in the industry. We expect that re-aligning our business operations and restructuring our debt through chapter 11 will provide a platform for this success. The filing should have little effect, if any, on the day-to-day responsibilities of most employees. Please continue to report to work as scheduled. We will continue to issue your weekly paycheck at the usual time. We have asked the Court to approve the Company’s various employee benefit programs and we expect the Court to grant that request. I want to assure you that we have adequate cash to continue paying our employees and paying for goods and services we need to operate our business and serve our customers. In conjunction with today’s filing, we have also received a commitment for up to $62 million in debtor-inpossession (DIP) financing. DIP financing is a kind of financing that companies in chapter 11 use to pay normal business expenses.
We expect that the DIP financing, once approved by the Hines – Irvine • 12621 Jeffery Road • Irvine, CA 92620 • 1-800-444-4499 Court, combined with the Company’s cash from continuing operations, will provide sufficient funding throughout the chapter 11 process. We want all of our employees to be fully informed about events that take place during the course of our restructuring. We will be conducting meetings with you to further explain the chapter 11 reorganization process and its impact on you. Your manager will be in contact with you shortly regarding the time and place of these meetings. There may be a lot about the chapter 11 process that is unfamiliar to you and your family. Therefore, we have prepared an Employee Guide to Chapter 11 Reorganization which will be distributed to you shortly. This guide will help you understand what chapter 11 means for you and for our company going forward. We encourage you to take the time to read through this Employee Guide and review the information with your family. If you have additional questions, please do not hesitate to contact your manager. You may also call the toll-free Restructuring Information Line at 888-498-7763. You are this Company’s greatest asset and each of you is critical to our future success. Your positive attitudes, knowledge of the product and consistent customer service are what keep customers coming back again and again to Hines Horticulture. Thank you for your continued hard work and loyalty to our Company. I look forward to working with all of you as we build a stronger future together. Sincerely, Jim Tennant CEO & President Sure Jim, just as soon as you fire the wack job of a CFO you just promoted, and the I/T manager!
Hines won't be the last. There are many growers in our industry on the brink. I am aware of many smaller players going under and leaving suppliers in the red.
The sad thing is, over the last 10 years or so the "big-box" retailers have pushed and pushed the growers to near bankruptcy (or to it). Yes, a few growers have managed to draw the winning lotto ticket - but most are being pushed around. The likes of Home Depot and Walmart have sucked the air out of growers to support their own earnings growth and to pay shareholders who don't care about the suppliers. It is sad and disgusting. They don't see it that way, of course. They sit in their ivory towers pushing growers around and telling us it is "our way or the highway". Well, it has to stop.
I know lots of growers who are about to give up. The economy IS tough but I am not complaining about that. I am upset that the likes of Home Depot and Walmart are willing to sacrifice us so they can still make BILLIONS OF DOLLARS in profit every quarter - ALL SUCKED FROM OUR POCKETS.
We cannot get a fair price for our material anymore. All the retailers want is lower prices irrespective of our costs. Well, they are now reaping what THEY have sowed. Weak suppliers and more bankruptcy's to come. At least I have the satisfaction of knowing that pretty soon their corporate "parents" will be sending them a pink slip and a "thanks for everything" letter pretty soon as they further look to cut costs. I hope they feel good about themselves now, because that pink slip will surely come and they will get what they deserve. NOTHING.
Hines Nursery has relied on one sugar daddy after another for 30 years to pile the unearned captiol into the business to keep the business afloat. Management did well for themselves. Investors always lost. Hines has been unfair competition to all the real nurseries that borrowed and paid back or funded thru plant sales. We will all be better off when the disappear.
The industry needs to find a balance for price, cost, and profit. Hines will not be the last to fall. Bankruptcy, ironically, will help them get out of the mess they are in and get healthy if done correctly.
I feel many others are right behind them and we will see more of this. I hear several large growers are ready to fold or be bought. In fact, what grower would NOT sell in this environment?
The big retailers have sucked us ALL dry in one way or another. Think back 20 or 30 years and where margins were and compare to today. At least then we SOLD product to the retailer. Today the likes of Home Depot are making growers give product to them for free, pay to get it to the store, and want rebates and give backs based on volume. Worse, they won't put people in the store to look after the material and help sell it - we have to pay for that too. It is disgusting and they are profiting off of our backs. When are we going to see this. How many have to fall?
What sucks even more is that a couple of weeks ago a new VP was named for HR, Finance and IT. If they are going bankrupt, what the heck are they promoting people for! The mis-management of the company is incredible...there is so much going on there that hasn't been published!
The news about Hines' imminent bankruptcy is perhaps the final chapter in a long sad story that began when Hines first avoided the chopping way back when it was owned by Weyerhauser.
For a few years, a Weyerhauser guru named Doug Allen came in to put a new coat of paint on the place to lure a new buyer and proceeded to institute a new strategy for the company that actually paid off. From what I've heard, virtually overnight, Hines was back in the black and producing products sought after from garden centers nationwide and a level of quality near to Monrovia (the finest nursery grower in the US).
Unfortunately, Hines new management (most of whom hadn't worked anywhere else before and had precious little experience working at Hines to begin with) became a sort of star chamber that lined their own pockets, promoted themselves and each other, and spent the majority of their time in endless meetings patting themselves on the back. Then came the specter of Home Depot, which promised untold riches through their huge marketing network and the wonderful efficiencies that could be reaped by selling to the box stores. It wasn't long before Walmart, Target and Lowes joined in on the fun, and Hines management thought it had discovered the ultimate way to print money; little did they know that they had warmly invited these vampires over the threshold and allowed themselves to be first bamboozled and then downright extorted by their customers, mostly Home Depot, all the while telling themselves that they were industry geniuses. Oh, and by the way, damn the pesky independent garden center who was being sold the VERY SAME PRODUCT sold to the chain stores, often at double or triple the price. In fact, Hines management was so daft that they actually delivered box store and independent nursery orders on the same truck, where the independent could see the end prices on the Home Depot labels were less than what these independents were paying Hines in the first place!
The real beginning of the end came during the late 90s when these management geniuses decided to take the company public, touting to potential investors and their own staff that they would soon become the largest nursery grower in the world, soon approaching the billion dollar mark following their incredible strategy. Too bad no one in the investment community believed them, and the IPO did not go as well as planned.
But this didn't stop the management geniuses from continuing their quest, embarking on acquiring other growers at top market value, fueled by what seemed to be a profitable relationship with the box stores. Again, Hines management found itself way over its head (though they would never admit it and instead would just shuffle the management deck and give themselves raises), and integrating these companies turned out be a profitless nightmare.
The solution? How about falling for the new software gig so popular during the dotcom craze that promised instant efficiency, reporting capability, and profit analysis. Too bad this didn't work out either, and the project became bloatedly over budget (to the tune of several million $) and in the end was only adopted partally. Again, the product of the VERY SAME GENIUSES that had been in charge of the store since the early 1990s.
Just one example of how the management simply could not get a grip on how the box stores were raping them of their profits. Instead of focusing on margins for their products, the management became obsessed with unit selling price alone, never once truly connecting these dots with how much it really took to produce their products. Their production costs were going up because they were forced to give more and more free service to the box stores (lest the box stores leave them high and dry), the overall strategy failure for the company's growth resulting in only greater debt, the box stores naming their own terms (I heard that at a Hines sales Christmas party, the buyer for Home Depot was actually invited), and the management geniuses continued to tell each other that they were the pillars of the industry. Imagine, a multimillion dollar company whose leadership could not recognize that getting a certain price for an item means nothing in itself if you don't have even a clue of what your costs are.
Ultimately, the writing was on the wall when for the whole company, its sales to Home Depot alone made up more than 50% of total sales. Even if Home Depot were a bunch of nice guys, savvy business folk would never put so many of their eggs in one customer's basket, let alone giving the store away like this to a bunch of self-described predators! And diversification? How about dividing the rest of the pie up with sales to Walmart and Lowes? More genius thinking!
Not surprisingly, nearly ALL of these gurus were squeezed out or downright fired from Hines over the past several years (though they have found their way into other nurseries to work their singular magic again); some are still looking for work.
So I suppose you can't really blame the current management for the condition of what once was a great Southern California company dating back to the late 20s. They simply inherited (though perhaps overconfidently) a severely dysfunctional behemoth, bred by an crony-based group of shortsighted dopes who really ought to be ashamed of themselves. But all of them still own their boats, wine chillers and expensive cars. Bravo boys!
I am suprised that more businesses have not opted for the protection of chapter 11. (It sure worked well for DELTA Airline) Nonetheless, someone with the brains, courage and financial backing to run such an operation will emerge, but I do belive that it will never be profitable as a publically traded corporation. It has to go private. Moreover, it must reduce its dependency on 'Know-Nothing' stores to a lesser share of it total business.
9 comments:
Whats interesting is how this gives people a voice. In the past all we could do was just watch. Now people with an interest in the company can speak up! The comments will get noticed too since when you Google Hines nurseries the post comes up right under Hines own web page!
Aahhh...the danger (and the beauty) of the Internet.
Hines Update-
CEO Letter to Employees
August 20, 2008
Dear Hines Employees:
I am writing to you today to inform you of an important action the Company has taken, which
we recently publicly announced.
In order to re-align our capital structure and restructure our debt, Hines Horticulture has filed
voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code.
The chapter 11 process will allow us to gain immediate liquidity, continue operations and focus
on maximizing the value of the business.
The Company also announced today that we have agreed to the terms of an asset purchase
agreement with Black Diamond Capital Management LLC where Black Diamond has agreed to
serve as a lead bidder during the bankruptcy sale process. The asset purchase agreement is
subject to a number of conditions, including completion of due diligence and financing. In
addition to being the Company’s lead bidder, Black Diamond is the Company’s largest
unsecured creditor, holding a majority of the Company’s 10.25% Senior Notes.
Though the decision to file for protection under chapter 11 was difficult, we are pleased to have
reached this agreement. We will work with our creditors and Black Diamond to exit chapter 11
as quickly as possible as a stronger, more competitive company.
There are several important facts you should know about chapter 11. First and most important,
Hines is continuing its operations and is not going out of business. We intend to use the chapter
11 process to reduce our debt, streamline our operations and take the steps necessary to ensure
our long-term financial health. Our goal is to preserve and strengthen our business so that we
can compete successfully in the industry. We expect that re-aligning our business operations and
restructuring our debt through chapter 11 will provide a platform for this success.
The filing should have little effect, if any, on the day-to-day responsibilities of most employees.
Please continue to report to work as scheduled. We will continue to issue your weekly paycheck
at the usual time. We have asked the Court to approve the Company’s various employee benefit
programs and we expect the Court to grant that request.
I want to assure you that we have adequate cash to continue paying our employees and paying
for goods and services we need to operate our business and serve our customers. In conjunction
with today’s filing, we have also received a commitment for up to $62 million in debtor-inpossession
(DIP) financing. DIP financing is a kind of financing that companies in chapter 11
use to pay normal business expenses.
We expect that the DIP financing, once approved by the
Hines – Irvine • 12621 Jeffery Road • Irvine, CA 92620 • 1-800-444-4499
Court, combined with the Company’s cash from continuing operations, will provide sufficient
funding throughout the chapter 11 process.
We want all of our employees to be fully informed about events that take place during the course
of our restructuring. We will be conducting meetings with you to further explain the chapter 11
reorganization process and its impact on you. Your manager will be in contact with you shortly
regarding the time and place of these meetings.
There may be a lot about the chapter 11 process that is unfamiliar to you and your family.
Therefore, we have prepared an Employee Guide to Chapter 11 Reorganization which will be
distributed to you shortly. This guide will help you understand what chapter 11 means for you
and for our company going forward. We encourage you to take the time to read through this
Employee Guide and review the information with your family. If you have additional questions,
please do not hesitate to contact your manager. You may also call the toll-free Restructuring
Information Line at 888-498-7763.
You are this Company’s greatest asset and each of you is critical to our future success. Your
positive attitudes, knowledge of the product and consistent customer service are what keep
customers coming back again and again to Hines Horticulture. Thank you for your continued
hard work and loyalty to our Company. I look forward to working with all of you as we build a
stronger future together.
Sincerely,
Jim Tennant
CEO & President
Sure Jim, just as soon as you fire the wack job of a CFO you just promoted, and the I/T manager!
Hines won't be the last. There are many growers in our industry on the brink. I am aware of many smaller players going under and leaving suppliers in the red.
The sad thing is, over the last 10 years or so the "big-box" retailers have pushed and pushed the growers to near bankruptcy (or to it). Yes, a few growers have managed to draw the winning lotto ticket - but most are being pushed around. The likes of Home Depot and Walmart have sucked the air out of growers to support their own earnings growth and to pay shareholders who don't care about the suppliers. It is sad and disgusting. They don't see it that way, of course. They sit in their ivory towers pushing growers around and telling us it is "our way or the highway". Well, it has to stop.
I know lots of growers who are about to give up. The economy IS tough but I am not complaining about that. I am upset that the likes of Home Depot and Walmart are willing to sacrifice us so they can still make BILLIONS OF DOLLARS in profit every quarter - ALL SUCKED FROM OUR POCKETS.
We cannot get a fair price for our material anymore. All the retailers want is lower prices irrespective of our costs. Well, they are now reaping what THEY have sowed. Weak suppliers and more bankruptcy's to come. At least I have the satisfaction of knowing that pretty soon their corporate "parents" will be sending them a pink slip and a "thanks for everything" letter pretty soon as they further look to cut costs. I hope they feel good about themselves now, because that pink slip will surely come and they will get what they deserve. NOTHING.
Hines Nursery has relied on one sugar daddy after another for 30 years to pile the unearned captiol into the business to keep the business afloat. Management did well for themselves. Investors always lost. Hines has been unfair competition to all the real nurseries that borrowed and paid back or funded thru plant sales. We will all be better off when the disappear.
The industry needs to find a balance for price, cost, and profit. Hines will not be the last to fall. Bankruptcy, ironically, will help them get out of the mess they are in and get healthy if done correctly.
I feel many others are right behind them and we will see more of this. I hear several large growers are ready to fold or be bought. In fact, what grower would NOT sell in this environment?
The big retailers have sucked us ALL dry in one way or another. Think back 20 or 30 years and where margins were and compare to today. At least then we SOLD product to the retailer. Today the likes of Home Depot are making growers give product to them for free, pay to get it to the store, and want rebates and give backs based on volume. Worse, they won't put people in the store to look after the material and help sell it - we have to pay for that too. It is disgusting and they are profiting off of our backs. When are we going to see this. How many have to fall?
What sucks even more is that a couple of weeks ago a new VP was named for HR, Finance and IT. If they are going bankrupt, what the heck are they promoting people for! The mis-management of the company is incredible...there is so much going on there that hasn't been published!
The news about Hines' imminent bankruptcy is perhaps the final chapter in a long sad story that began when Hines first avoided the chopping way back when it was owned by Weyerhauser.
For a few years, a Weyerhauser guru named Doug Allen came in to put a new coat of paint on the place to lure a new buyer and proceeded to institute a new strategy for the company that actually paid off. From what I've heard, virtually overnight, Hines was back in the black and producing products sought after from garden centers nationwide and a level of quality near to Monrovia (the finest nursery grower in the US).
Unfortunately, Hines new management (most of whom hadn't worked anywhere else before and had precious little experience working at Hines to begin with) became a sort of star chamber that lined their own pockets, promoted themselves and each other, and spent the majority of their time in endless meetings patting themselves on the back. Then came the specter of Home Depot, which promised untold riches through their huge marketing network and the wonderful efficiencies that could be reaped by selling to the box stores. It wasn't long before Walmart, Target and Lowes joined in on the fun, and Hines management thought it had discovered the ultimate way to print money; little did they know that they had warmly invited these vampires over the threshold and allowed themselves to be first bamboozled and then downright extorted by their customers, mostly Home Depot, all the while telling themselves that they were industry geniuses. Oh, and by the way, damn the pesky independent garden center who was being sold the VERY SAME PRODUCT sold to the chain stores, often at double or triple the price. In fact, Hines management was so daft that they actually delivered box store and independent nursery orders on the same truck, where the independent could see the end prices on the Home Depot labels were less than what these independents were paying Hines in the first place!
The real beginning of the end came during the late 90s when these management geniuses decided to take the company public, touting to potential investors and their own staff that they would soon become the largest nursery grower in the world, soon approaching the billion dollar mark following their incredible strategy. Too bad no one in the investment community believed them, and the IPO did not go as well as planned.
But this didn't stop the management geniuses from continuing their quest, embarking on acquiring other growers at top market value, fueled by what seemed to be a profitable relationship with the box stores. Again, Hines management found itself way over its head (though they would never admit it and instead would just shuffle the management deck and give themselves raises), and integrating these companies turned out be a profitless nightmare.
The solution? How about falling for the new software gig so popular during the dotcom craze that promised instant efficiency, reporting capability, and profit analysis. Too bad this didn't work out either, and the project became bloatedly over budget (to the tune of several million $) and in the end was only adopted partally. Again, the product of the VERY SAME GENIUSES that had been in charge of the store since the early 1990s.
Just one example of how the management simply could not get a grip on how the box stores were raping them of their profits. Instead of focusing on margins for their products, the management became obsessed with unit selling price alone, never once truly connecting these dots with how much it really took to produce their products. Their production costs were going up because they were forced to give more and more free service to the box stores (lest the box stores leave them high and dry), the overall strategy failure for the company's growth resulting in only greater debt, the box stores naming their own terms (I heard that at a Hines sales Christmas party, the buyer for Home Depot was actually invited), and the management geniuses continued to tell each other that they were the pillars of the industry. Imagine, a multimillion dollar company whose leadership could not recognize that getting a certain price for an item means nothing in itself if you don't have even a clue of what your costs are.
Ultimately, the writing was on the wall when for the whole company, its sales to Home Depot alone made up more than 50% of total sales. Even if Home Depot were a bunch of nice guys, savvy business folk would never put so many of their eggs in one customer's basket, let alone giving the store away like this to a bunch of self-described predators! And diversification? How about dividing the rest of the pie up with sales to Walmart and Lowes? More genius thinking!
Not surprisingly, nearly ALL of these gurus were squeezed out or downright fired from Hines over the past several years (though they have found their way into other nurseries to work their singular magic again); some are still looking for work.
So I suppose you can't really blame the current management for the condition of what once was a great Southern California company dating back to the late 20s. They simply inherited (though perhaps overconfidently) a severely dysfunctional behemoth, bred by an crony-based group of shortsighted dopes who really ought to be ashamed of themselves. But all of them still own their boats, wine chillers and expensive cars. Bravo boys!
I am suprised that more businesses have not opted for the protection of chapter 11. (It sure worked well for DELTA Airline) Nonetheless, someone with the brains, courage and financial backing to run such an operation will emerge, but I do belive that it will never be profitable as a publically traded corporation. It has to go private. Moreover, it must reduce its dependency on 'Know-Nothing' stores to a lesser share of it total business.
Post a Comment