Family-owned carpet maker and distributor Beaulieu has been working with Armory Group for help exploring strategic alternatives, said two sources familiar with the situation.
The company’s LTM EBITDA hovers around breakeven, the sources continued, while it has roughly USD 70m outstanding on a BofA Merrill Lynch-agented revolver that matures before the end of 3Q17.
Beaulieu was founded in 1978. There was a generational hand off in upper management last June, as the founding couple stepped back and made son-in-law Michael Pollard president and son Stan Bouckaert senior vice president. Meanwhile, CEO Karel Vercruyssen left the company last July after roughly 4 years at the helm.
The company has yet to announce a replacement. The company also named Larry Rogers, a former president of Bank of America Business Capital, to its board of directors last year.
Sources noted that Beaulieu has struggled in part due to competition from larger flooring providers Mohawk Industries and Shaw Industries. The former has a market capitalization of nearly USD 18bn while the latter is a subsidiary of Berkshire Hathaway.
For its part, Dalton, Georgia-based Beaulieu has more than 22 facilities worldwide. In addition to carpeting, the company makes and distributes hard flooring surfaces such as laminate and vinyl.
Earlier this year, Mohawk acquired and announced plans to expand a Bridgeport, Alabama nylon fiber plant that was previously owned by Beaulieu and slated for closure. Beaulieu executives had cited shrinking consumer demand for wall-to-wall carpeting as a reason for the plant closure.
However, macro trends have been generally favorable for flooring makers. While privately-owned seasonally adjusted housing starts came in at an annualized rate of 1.092m in May, down 5.5% from April and down 2.5% from May 2016, those figures represent a significant increase from a 10-year trough of 478,000 in April 2009.
Beaulieu, BofA and Armory did not return requests for comment.