School Specialty Commences Financial Restructuring, Confirms Chapter 11 Filing

School Specialty, Inc. SCHS ("the Company") today announced that it has entered into an asset purchase agreement with an affiliate of Bayside Capital, Inc., under which School Specialty proposes to sell its assets as a going concern through a court-supervised sale process. To facilitate the sale transaction, School Specialty and certain of its subsidiaries today filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware and is pursuing the sale process under Section 363 of the Bankruptcy Code. In connection with the filing, the Company has secured a new lending arrangement to be provided by School Specialty's existing asset-based lenders and a commitment for $50 million in additional capital in the form of debtor-in-possession financing from an affiliate of Bayside Capital. This financing is intended to provide School Specialty with ample liquidity to operate the business and meet its ongoing obligations to customers, business partners, suppliers and employees through completion of the sale process. Today's announcement will enable a sale of the business on an expedited basis to Bayside Capital or any higher or better bidder approved by the Court, and its emergence as owned by a financially stronger entity. The Company anticipates completing the sale process in approximately 60-90 days. School Specialty's President and CEO Michael P. Lavelle, said, "We are pleased to have reached these agreements with Bayside, and are confident School Specialty's business has a bright future. We fully expect to continue normal business operations, providing quality, value-driven education products and excellent customer care and programs. Our customers remain a top priority and we plan to meet all our customer commitments and maintain customer policies and programs. "We have made good progress in our turnaround strategy to strengthen School Specialty's business by realigning the organization to deliver better value for our customers and improving the quality and efficiency of operations. In School Specialty, we have a company with excellent potential but with a burdensome amount of debt on our balance sheet. The actions we are announcing today allow us to strengthen our financial condition as we continue transforming School Specialty's business for the future, including building our brands and product offerings and positioning our business for long-term success as the funding environment improves," Lavelle concluded. School Specialty's Canadian subsidiaries are included in the proposed sale but are not part of the Chapter 11. The Chapter 11 filings are not expected to have any impact on the Company's operations in Canada, which will continue in the ordinary course without interruption. It is uncertain whether School Specialty shareholders will receive any distribution from proceeds of a sale and whether these securities will have any value following the Chapter 11 case. Bayside Capital is an affiliate of H.I.G. Capital, a leading global private investment firm with more than $10 billion of equity capital under management.