HOUSEHOLD goods manufacturer, Tupperware Brands Corporation (NYSE: TUP) is facing possible bankruptcy due to piling debts and a dip in sales.
April 20, 2023
4 min read
Local distributors panic, as Tupperware faces bankruptcy
Tupperware President and Chief Executive Officer, Miguel Fernandez
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The Orlando, Florida, US-based company, which sells containers to preserve food and ingredients, engaged several advisers from New York investment bank, Moelis & Co., law firm Kirkland & Ellis, and turnaround management firm Alvarez & Marsal (also from New York), the Wall Street Journal reported.
The 77-year-old household brand is barely staying afloat, and it said it is looking for financing because it does not have enough cash to fund its operations.
The company is further exploring potential layoffs and reviewing its real estate portfolio.
It also cites a failure to appeal to the young market and a sharp drop in share price.
Tupperware has been a significant part of households in Lesotho and around the globe, so it came as a shock when the news of its financial hitches came to the fore.
The company has also suspended its online shopping line, and customers are urged to buy from their local distributors.
In Lesotho, thousands of people make a living as Tupperware product distributors, and the news of the impending closure has put them on edge.
Most are worried about their livelihoods should the company cease to operate.
"I am truly worried about this, I managed to build a home, buy cars, and send my children to good schools through Tupperware.
"Selling Tupperware products has been my business for years, I don’t know how I will survive after this," local Tupperware distributor, ’Mathato Lenkoane said in an interview this week.
In a statement, the company said its board of directors was engaged with management to improve the firm’s capital structure and near-term liquidity.
It said the company engaged financial advisors to assist in securing supplemental financing and was engaging in discussions with potential investors or financing partners.
"Tupperware has embarked on a journey to turn around our operations, and today marks a critical step in addressing our capital and liquidity positions.
"The company’s doing everything in its power to mitigate the effects of recent events, and we are taking immediate action to seek additional financing and address our financial position," the company’s President and Chief Executive Officer, Miguel Fernandez, said in the statement.
The company has determined that a violation of its credit facility covenants is probable to occur as a result of the company’s delay in filing its Annual Report for the year ended December 31, 2022, as well as cash constraints caused by higher interest costs and the timing of re-engineering actions.
Due to the challenging internal and external business economics, coupled with the increased levels and costs of borrowing under its credit facility, the company forecasts that if it is unable to obtain adequate capital resources or amendments to its credit agreement, it may not have adequate liquidity in the near term.
The dip could further lead to the company being delisted from the New York Stock Exchange.
Other local distributors, however, believe that the company will eventually manage to deal with its challenges and remain afloat for many years to come.
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"I have seen the news, but, as part of this company, I think this is one of those challenges that come and will just pass. This is a global brand that has encountered several challenges in the past seven decades.
"Its closure could be the death of many people, not only in Lesotho but in other parts of the world. That is why it has to overcome these challenges," another local distributor, Nthatisi Moloi said.
Tupperware Brands Corporation is a leading global consumer products company that designs innovative, functional, and environmentally responsible products that people love and trust.
Founded in 1956, Tupperware’s signature container created the modern food storage category that revolutionised the way the world stores, services and prepares food.
The company distributes its products to nearly 70 countries, primarily through independent representatives around the world.
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