The iconic brand secures an agreement to reduce debt, re-establish financing, and extend deadlines, signaling a potential turnaround
By: SSN Staf
“I am confident that this agreement provides us with the financial flexibility to continue executing on our near-term turnaround efforts as well as our long-term strategy to create a global omni-channel consumer brand.” —Mariela Matute, Chief Financial Officer, Tupperware
Tupperware, recently presumed dead after announcing earlier this year it might not be able to stay in business, appears to have new life.
The party plan giant announced in August it had finalized an agreement with its lenders to restructure its debt, narrowly avoiding going bust in the process.
The deal with its creditors will reduce interest payment obligations by $150 million. Tupperware also secured $21 million in new financing, an extension on the deadline for paying back about $348 million in debt and a reduction in the amount of debt it owes by around $55 million.
Tupperware shares surged in early August on news of the lending agreement.
“I am confident that this agreement provides us with the financial flexibility to continue executing on our near-term turnaround efforts as well as our long-term strategy to create a global omni-channel consumer brand,” Chief Financial Officer Mariela Matute said in a statement. “We are committed to making ongoing progress in improving liquidity and strengthening our capital structure. We appreciate the support of our lenders, who share in our strategy, as we move forward.”
In April, the company announced it was struggling to survive as a sales slump coupled with mounting debt were pushing it to the brink. At the time, the company said in a regulatory filing that “there is substantial doubt about the company’s ability to continue as a going concern due to anticipated non-compliance with financial covenants and inadequate liquidity to fund its operating costs and obligations in the near term.”
Tupperware warned that it could violate obligations in its credit, and that cash flow was a top priority. And for months, the company had been discussing financing options with advisers to avoid shutting down the iconic direct selling brand.
To help with ongoing debt issues, the company also appointed Brian Fox, a managing director with Alvarez & Marsal’s North American Commercial Restructuring practice in New York, as its chief restructuring officer.
The company’s recent problems also extended to the New York Stock Exchange, which sent Tupperware two noncompliance notices in the span of three months earlier this year. In June, the NYSE told the company it was in noncompliance because its market capitalization was too low, and that its average closing price of its stock was less than $1 over 30 consecutive trading days.
The NYSE gave Tupperware 45 days to submit a plan before potentially delisting the company.
Now, with a new lending deal in place, analysts and investors appear satisfied for the time being, as the company charts its future.
Share prices started rallying in late July, ahead of the lending deal’s announcement. That was when the company entered meme-stock territory with investors driving the value of Tupperware stock up five-fold before the restructuring deal was announced on Aug. 3. By Aug. 7 the stock had jumped to $5.23 from a 52-week low of 61 cents on July 20.
Tupperware stock was trading at $2.51 as of Aug. 24.
Along with its restructuring, Tupperware also announced on Aug. 24 that it had expanded the size of its board of directors to 13. As part of the lending deal, the company agreed to appoint an additional director with restructuring and turnaround experience.
To fill that role, Tupperware tapped Paul Aronzon, a strategic financial consultant who specializes in corporate reorganizations. He will chair the company’s “Transformation Committee,” which is focused on Tupperware’s restructuring.
After years of slumping sales, Tupperware seemed to be on track to regain its footing financially. The company, which sells products in over 70 countries through its independent sales force, launched an ambitious three-year turnaround plan in 2020. This included an executive shake-up aimed at rejuvenating its beleaguered brand after years of revenue declines and falling stock prices.
That same year, Tupperware reported its first year-over-year sales increase in a quarter since 2017, and the company’s stock rallied at the time in response. Things continued to look up, with retail giant Target starting to carry Tupperware products on store shelves in 2022.
But Tupperware has faced additional challenges in recent financial quarters, as pandemic trends bolstering their sales have softened: More people have returned to restaurants and eating outside the home again.
In 2022, sales dropped by 18% to $1.3 billion compared to 2021, and the company’s stock price has plummeted 86% since last June.
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