Magazine Distributor Shuts Down While It Restructures Debt
St. Louis-based HDA Inc. turns back magazines, locks out employees.
HDA is aÂ St. Louis-based distributor that has been the magazine and book supplier of specialty magazines to specialty stores since 1983. Recent events, however, have indicated the company is dealing with some major problems.
A client of mine had been blindsided by HDAâ€™s refusal to receive 57,000 copies of their magazine. The copies were bound for Lowes, Menards, and Dollar General. A confused shipper contacted the client to find out what was up. The publisher had no idea.
Neither, it appeared, did anyone else. Calls to national distributors were received with shock and confusion. Calls to some of HDAâ€™s retail partners were met with blank disbelief. Even now, no official announcement has been made. There is no press release, notice, explanation, or any kind of acknowledgement at all on the HDA website.
According to Bob Ketterer, HDA Inc.'s president, CEO and chairman, the company is working through a significant debt restructuring.
â€śWe donâ€™t intend to file for bankruptcy protection," he said in a phone call. "We are in a reorganization, but have neither declared nor been forced into bankruptcy. Our intention is to continue as a book and magazine distributor. The process had to be sped up because of our arrangement with the bank. We ship to 16,000 locations around the U.S. The locations are 100-percent SBT (scan based trading). What that means is that we own that debt load. It drove up the debt to a level the bank and the secured creditors found unacceptable, and we were forced to cut overhead dramatically. Banks are both risk-averse and unfamiliar with the way our business works. The restructuring process was hastened based on the bank demands.â€ť
HDA employees, I am told, showed up at work Monday morning to find the doors to their company locked. Each received a letter indicating that it was the last day of work and the last day of insurance coverage.
People with whom I spoke were stunned. There had been a shared perception that things had been going well; only a few days before they had been informed by Lowes that they could count on continuing as magazine category manager for the Loews stores through 2017.
â€śIt wasnâ€™t ideal,â€ť Ketterer acknowledged. â€śIn fact, it was one of the saddest days of my life. I started this business 30 years ago. Some of those people were with us 15-20 years. It was rough. But we really had no choice.â€ťÂ
What about the hundreds of magazine and book publishers with whom they work to distribute several thousand titles to the specialty market? What about the outstanding payments owed? I asked Ketterer about my clientâ€™s receivablesâ€”the publisher, whose publication is Loweâ€™s top-selling magazine, is looking for contractually agreed-upon payment that hasnâ€™t been received.
â€śWe want to continue to do so. Weâ€™re still very much in business. We are working with the bank and an investor to restructure and move forward. We are going to be leaner and meaner. We would like our publishing and retailer partners to work with us.â€ť
According to a source, HDA hopes to re-open within eight to ten days, and hire back a team from the employees turned away on Monday. Ketterer did not immediately confirm this.
I mentioned this to my publisher client. â€śItâ€™s got to be a two-way street,â€ť the publisher replied. â€śWe have always worked cooperatively with HDA, delivering to them Lowes' top-selling magazine. Lowes has been paying HDA every week, based on the very-healthy POS sales. I havenâ€™t seen that money, and I havenâ€™t had a return call from the distributor. If Iâ€™m to work with HDA, HDA needs to work with me.â€ť
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