Inscape urges stockholders to sell all shares in last-ditch bid to stay afloat
December 9, 2022 | 11:49 am CST

HOLLAND LANDING, Ontario – Financially-strapped Inscape, a manufacturer of office furniture, recommended that its stock investors sell all of their outstanding shares in a “friendly takeover bid” by Hillco Capital Ltd.

The all-cash offer by HUK 121, a wholly-owned subsidiary of Hilco, will pay $0.007 a share, 20% of the the company’s stock value recorded Dec. 8 on the Toronto Stock Exchange. Shareholders have until Dec. 23 to deposit their shares under the Hilco offer.

"The Hilco offer immediately crystallizes certain value for shareholders by providing 100% cash consideration for the shares,” said Eric Egoetz, Inscape’s CEO. “Inscape's Board recommends that shareholders tender their shares to Hilco's offer as soon as possible." 

In a director’s circular issued to Inscape shareholders two weeks ago, Neil McDonnell, chairman or the board, wrote, ““After exploring opportunities for shareholders with financial and strategic parties in the U.S. and in Canada, and after careful consideration (including a thorough review by the Board), in consultation with financial and legal advisors, the board has voted UNANIMOUSLY to recommend that shareholders ACCEPT the Hilco offer and DEPOSIT their Shares under the Hilco Offer. The Board has concluded that there is no credible alternative to the Hilco Offer and that if the Hilco Offer does not proceed, the Company will, more than likely be required to commence insolvency proceedings.”

Inscape Holland Landing Furniture Factory Floor
Inscape operates its 307,000-square-foot flagship plant in Holland Landing, Ontario,

Inscape’s ongoing financial struggles were highlighted in the release of its second quarter fiscal 2023 report. Total sales revenue for the second quarter ended Oct. 31 was $8.3 million, compared to $9.7 million for same period of fiscal 2022. What’s more, Inscape experienced a net loss of $7.9 million for the second quarter compared to a net loss of $2.6 million for the second quarter of 2022. Key causes of the sales decline cited by the company included “delays in the completion of certain projects, reduced average size of incoming orders and lower than expected order volumes related to a slower return-to-office observed throughout North America.”

Through the first six months of fiscal 2023, Inscape sustained a $14 million net loss on $17.2 million in sales.

In announcing its support of Hilco’s offer, Inscape also said it had entered into a loan agreement with HUK 116 Ltd., another subsidiary of Hilco, for the establishment of a $5 million demand secured credit. The new credit facility provides the company funds to finance working capital and for other corporate purposes.

Among its recent efforts to generate cashflow, the office furniture maker sold its 307,000-square-foot factory and warehouse space situated on 33.6 acres to an unnamed third party for CDN$32,750,000 in January. The sale included a 10-year leaseback agreement for Inscape to continue using the facility with two extension options of five years each. The company indicated it will not require all of the space moving forward.

Inscape is a designer and manufacturer of office furnishings and movable wall systems. The company operates two facilities in Canada and the United States with approximately 343,000 square feet of space. Its products are sold through a network of dealers and representatives supported by showrooms throughout North America. The company was founded in 1888 as Office Specialty in Rochester, N.Y., and moved to Canada in 1904. It has been operating out of its current Holland Landing location since 1950.

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Rich Christianson | President/Owner/C-Level

Rich Christianson is the owner of Richson Media LLC, a Chicago-based communications firm focused on the industrial woodworking sector. Rich is the former long-time editorial director and associate publisher of Woodworking Network. During his nearly 35-year career, Rich has toured more than 250 woodworking operations throughout North America, Europe and Asia and has written extensively on woodworking technology, design and supply trends. He has also directed and promoted dozens of woodworking trade shows, conferences and seminars including the Cabinets & Closets Conference & Expo and the Woodworking Machinery & Supply Conference & Expo, Canada’s largest woodworking show.