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The Merit Group, the nation’s largest distributor of paint sundry products, has filed a voluntary petition for Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of South Carolina. The Spartanburg, S.C.-based firm, parent company of Lancaster and Five Star, has obtained a commitment for a $55 million debtor in possession of financing from its senior lender, Regions Bank, so it can continue operations without interruption during the reorganization process.
The Merit Group’s management team and advisers will focus on a potential sale of the business or a strategic investment in the next 90 days, according to a company announcement.
“For more than 58 years, Merit has served the needs of the paint sundries industry through its commitment to premier service and product diversity. This next step will allow the organization time to evaluate all alternatives to position Merit for future success,” said Mitch Jolley, president and CEO. Jolley recently returned as the chief executive, after having served as Merit’s CEO from 1990 to 2009. He replaced Jay Baker, who held the position since October 2009.
The company has retained Alvarez & Marsal as its financial advisers and Morgan Joseph TriArtisan as its investment banker.
Founded as Lancaster Supply in 1953, Merit Group now operates a nationwide distribution network that serves national, regional and independent paint chains, home improvement centers, hardware stores, lumberyards and drywall yards in the United States, the Caribbean and Central and South America. Its distribution centers are located in South Carolina, Florida, Texas, California, Utah, Kentucky, New Jersey and New York.