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Revell Under New Management after Hobbico Bankruptcy


jargonking

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16 hours ago, Plastic Bonsai said:

That is understood but does the licensing cover re-boxing? I'm probably not the sharpest tool at the picnic but if Revell reboxed and sold them in Europe then Bandai would benefit from the deal, if the licence is a percentage of the sales they would benefit, Revell would get a cut of the sales and we get the SW kite of our dreams and support 2 fine companies as well. The irony of the company now failing in such short order after it trumpeted it's take over of Revell to foist more of their core business to a wider world is not lost on me either even though I am one sandwich short in the kitchen drawer.

 

Likewise a similar deal on the Japanese Anderson models.... I know I know.... ITC or whoever will not sanction the sale of anything related to the series that would boost interest in them and lead to more sales for them.

I think (take cover...) that Revell could sell Bandai SW reboxings in Europe. That is basically the same as they do with the "Master" series: Revell sells Fine Mold kits (AFAIK they get complete Plastic trees from FM). FM cannot sell these kits in Asia anymore but they obviously can sell them to another brand which holds the license to sell these kits.

Now the question is if Bandai would be the better option for Revell. I can imagine that FM offers a better price, as they have no other chance to sell their "tooling". On the other hand Bandai could obviously increase sales via Revell - but the details will be in the license. Atthe price point of the reboxed FM kits in Europe (not to speak of the small range on offer) I prefer to buy Bandai from Asia.

Frankly soken - I do not understand the whole idea behind how Revell treats the Star Wars range, but I am pretty sure this is not why Hobbico went the Chapter 11 route.

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I would like to know just how much was shelled out on the Disney Star Wars Licence, I bet a good few bob, to a point it would be like a anvil tied round one's man-vegetables by thin wire.   I made my feeling clear about the ex FM tooling been sold for RRP £119.99, seven inch long and not that much plastic, got to be the worst value model ever issued, no matter how so called good it is.   You can get a Zoukei Mura Kit with over 1000 parts for not much more wonga, or even a Revell 1/32 HU219 for RRP £59.99.

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1 hour ago, TIGER HOBBIESLIMITED said:

I would like to know just how much was shelled out on the Disney Star Wars Licence, I bet a good few bob, to a point it would be like a anvil tied round one's man-vegetables by thin wire.   I made my feeling clear about the ex FM tooling been sold for RRP £119.99, seven inch long and not that much plastic, got to be the worst value model ever issued, no matter how so called good it is.   You can get a Zoukei Mura Kit with over 1000 parts for not much more wonga, or even a Revell 1/32 HU219 for RRP £59.99.

You can bet that licence was not cheap.

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  • 1 month later...

http://www.news-gazette.com/news/local/2018-03-13/hobbico-hopes-find-buyer-auction-set-march-26.html

 

Things are coming to a head. Remember that while Revell of Germany is not affected by the bankruptcy, it remains an asset of the company, and is likely to be included in the sale.

 

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6 hours ago, Julien said:

The assets/liabilities there makes poor reading.

 

The hope is at least Revell Germany will be sold off, but to whom?

 

Julien

Maybe to a private equity group... I should think Revell Germany can be a good investment - at least for the periot of time such buyers usually have in mind.

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7 hours ago, TheVoidDragon said:

This is the first time I've heard about Hobbico and their buyout of Revell, so I'm not sure what impact that had on the model kit side of things. What is it that they've done/not done that's been a bad thing?

This is a statement from the bankruptcy petition filed in Jan 2018:

 

"The bankruptcy petition shows they owe money to hundreds of companies. The list on the statement only shows the 30 largest debts they have.

 

That's just the start of Hobbico's problems. This loss comes at a cost to more than just the company alone. 

 

The bankruptcy petition says it's more than $100,000,000 in debtCurrent and former employees are feeling the hard financial hit."

 

Source:  Illinois Homepage.net  ( scroll down for full documentation)

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11 hours ago, TheVoidDragon said:

This is the first time I've heard about Hobbico and their buyout of Revell, so I'm not sure what impact that had on the model kit side of things. What is it that they've done/not done that's been a bad thing?

Hobbico already owned Revell USA and it was widely suggested that they purchased Revell Germany to get their hands on an established European distribution network - a viewpoint I tend to agree with. Certainly Revell Germany's R/C offerings have increased while their kit ranges have suffered from a decrease in new moulds and more reissues and reboxings. 

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This whole sorry saga seems to be another case of a company moving away from their core businesses and buying everything in sight without having a clear direction for the future. Boot's and WH Smiths did the similar sort of thing and they very nearly badly came unstuck. It strikes me that companies are more about shareholder value than actually producing something or providing a service. It is understandable that a big institutional investor like a pension scheme wants a good return, but that seems to be the aim of some corporate heads. 

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On 20/03/2018 at 8:44 PM, Mr T said:

It strikes me that companies are more about shareholder value than actually producing something or providing a service.

The directors are legally obliged to prioritise shareholder value. If that is in conflict with providing a product or service, they're in the wrong business.

 

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Horizon Hobby is the stalking horse bidder for the R/C business, with an offer of $19M:

 

http://www.news-gazette.com/news/local/2018-03-24/horizon-hobby-agrees-make-188m-bid-hobbico-units.html

 

Another company, Estes Industries LLC, will bid $6M for the Estes model rocket business.

 

No word on any stalking horses for Revell Inc. or Revell GmbH.

 

Cheers,

Bill

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On 3/24/2018 at 10:19 AM, Navy Bird said:

Horizon Hobby is the stalking horse bidder for the R/C business, with an offer of $19M:

 

http://www.news-gazette.com/news/local/2018-03-24/horizon-hobby-agrees-make-188m-bid-hobbico-units.html

 

Another company, Estes Industries LLC, will bid $6M for the Estes model rocket business.

 

No word on any stalking horses for Revell Inc. or Revell GmbH.

 

Cheers,

Bill

Horizon buying Hobbico will be the ultimate irony. Both companies are located in Champaign, IL and Hobbico was always the larger and more successful of the two. I would guess that Horizon wants to acquire the exclusive Hobbico brands rather than maintaining the company as a going concern. Let's hope Revell is bought up separately. 

 

The parent company, Hobbico has filed for Chapter 11 bankruptcy which gives it protection from creditors to restructure its debt and operations. In this case, the company has determined that selling the company as a whole or in pieces is the best strategy for preserving the value of the business. Hobbico is currently owned by its employee stock ownership plan (ESOP) which is call the debtor-in-posession. There are no third party receivers/liquidators involved at this point. The ESOP currently has debts of over $100 million and the assets of the company are estimated to be around $50 million. Revenue in 2017 was around $110 million. In selling the businesses, the ESOP is trying to raise as much money as possible to pay back its creditors and this is the purpose of the auction this week (this is now scheduled to be held in Delaware on Wednesday). The sale is subject to approval from the bankruptcy court and if not approved would lead to liquidation of the businesses. Upon completion of the auction and closing of the sale(s) the proceeds go to the Hobbico ESOP to be distributed to the creditors according to the seniority of their debts. In this case, Hobbico also used as much as $72 million in debtor-in-possession financing to keep operations going and this has priority over all other claims. Whatever assets remain (unsold businesses, orphaned brands, real estate, etc) will then be liquidated and the bankrupt Hobbico ESOP will be wound up. The businesses that were sold continue on free of the debt obligations of the parent company. Note that the employee  "owners" have the lowest priority on claims to the proceeds of the sale of the company; it is very likely that the value of their stock will be entirely wiped out. This could be a significant fraction of their retirement savings.

 

At the moment, there are announced stalking-horse bidders (who set a floor price at the auction in return for some financial compensation in the event they don't win) for the radio control brands and distribution businesses of Hobbico as well as the model rocket company Estes. There are no announced stalking-horse bidders for Revell USA or Revell Gmbh, but this does not mean that there will not be bidders during the actual auction. My assumption is that both companies operate as separate P-and-L (profit and loss) centers of Hobbico and operate mostly independently but pay a management fee to Hobbico plus some fraction of their profits and in return benefit from common HR, payroll, and accounting functions. The reasonable assumption is that the two Revell's are worth more as going concerns than if their assets (brand identity, kit molds, etc) were sold off separately, which would happen in a liquidation. It goes without saying that neither Revell USA, nor Revell Gmbh can survive unless a buyer comes forward.

Edited by VMA131Marine
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On 3/23/2018 at 3:03 PM, Chimpion said:

The directors are legally obliged to prioritise shareholder value. If that is in conflict with providing a product or service, they're in the wrong business.

 

Not in Germany, which has a stakeholder rather than a shareholder style system of corporate governance.

 

So let's all keep our fingers crossed that if they do change hands, they do to a company that isn't from the shareholder-obsessed Anglo-Saxon world.

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Here's a link to the summary of Revell USA's assets and liabilities. It's particularly interesting because it shows how much Revell was paying to maintain licensing agreements. The entries for Disney are fairly staggering compared to the others: a couple of hundred thousand dollars, which I guess covers the Star Wars licenses. This document shows the amounts unpaid so who knows what the total amounts are. Since these are unpaid, presumably Revell is in breach of their licensing agreements and whoever buys the company would have to pay up to be able to sell related kits.

 

http://upshotservices.s3.amazonaws.com/files/ff11e972-f6c7-458c-a00b-05e14958d7f7/60b053f3-53c6-4714-99c4-389512ed2150.pdf

 

One item of concern is that Revell's largest creditor is a company in China owed over $1 million. This has to be the company that molds Revell's kits and has possession of the moulds. This could complicate any purchase of Revell USA.

 

Here's the link to the Hobbico statement. This shows the Revell DE owes the parent company $14 million and Hobbico Gmbh owes over $26 million. I have no idea if they have to pay or have the ability to pay.

 

http://upshotservices.s3.amazonaws.com/files/ff11e972-f6c7-458c-a00b-05e14958d7f7/6d211b0f-041c-4525-9e96-80c01d54695b.pdf

 

The minimum bid for Revell Gmbh is $8 million or, for $10 million, they will throw in Revell USA as well. If only Hornby were in better financial shape...

 

http://www.jndla.com/cases/hobbico/docket no. 243.pdf

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On 18.3.2018 at 2:11 PM, Caerbannog said:

Maybe to a private equity group... I should think Revell Germany can be a good investment - at least for the periot of time such buyers usually have in mind.

Would be my guess too, a management buyout backed by a PE house. We had that before...

6 hours ago, VMA131Marine said:

Here's a link to the summary of Revell USA's assets and liabilities. It's particularly interesting because it shows how much Revell was paying to maintain licensing agreements. The entries for Disney are fairly staggering compared to the others: a couple of hundred thousand dollars, which I guess covers the Star Wars licenses. This document shows the amounts unpaid so who knows what the total amounts are. Since these are unpaid, presumably Revell is in breach of their licensing agreements and whoever buys the company would have to pay up to be able to sell related kits.

 

http://upshotservices.s3.amazonaws.com/files/ff11e972-f6c7-458c-a00b-05e14958d7f7/60b053f3-53c6-4714-99c4-389512ed2150.pdf

 

One item of concern is that Revell's largest creditor is a company in China owed over $1 million. This has to be the company that molds Revell's kits and has possession of the moulds. This could complicate any purchase of Revell USA.

 

Here's the link to the Hobbico statement. This shows the Revell DE owes the parent company $14 million and Hobbico Gmbh owes over $26 million. I have no idea if they have to pay or have the ability to pay.

 

http://upshotservices.s3.amazonaws.com/files/ff11e972-f6c7-458c-a00b-05e14958d7f7/6d211b0f-041c-4525-9e96-80c01d54695b.pdf

 

The minimum bid for Revell Gmbh is $8 million or, for $10 million, they will throw in Revell USA as well. If only Hornby were in better financial shape...

 

http://www.jndla.com/cases/hobbico/docket no. 243.pdf

Not sure if I can subscribe to the last sentence, as Hornby‘s Problems seem to have a very similar root cause.

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On 26/01/2018 at 6:28 AM, TIGER HOBBIESLIMITED said:

I would like to know just how much was shelled out on the Disney Star Wars Licence, I bet a good few bob, to a point it would be like a anvil tied round one's man-vegetables by thin wire.   I made my feeling clear about the ex FM tooling been sold for RRP £119.99, seven inch long and not that much plastic, got to be the worst value model ever issued, no matter how so called good it is.   You can get a Zoukei Mura Kit with over 1000 parts for not much more wonga, or even a Revell 1/32 HU219 for RRP £59.99.

Actually Revell re-boxed the 72nd scale Fine molds Millennium Falcon which has an 18 inch diameter and somewhere near 1000 parts . It was good value.

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7 hours ago, TIGER HOBBIESLIMITED said:

Hi That may be the case but this was not the 1/72 version it was the 1/144 version that they tried to sell for £119.99 not the 1/72 version.

I could understand that pricing if it was the only kit available but considering you can get the  equally as nice bandai kit for a measly £38 then it boggles the mind .

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The notices of successful bids in the auction of Hobbico have been filed at 

http://www.jndla.com/cases/hobbico 

(Look under the docket section) 

The Hobbico RC business and Estes Rockets received successful bids, but no bids are recorded for Revell USA or Revell Germany. 
There was also an objection filed by Hobbico's creditors to the sale of the RC businesses. 

I can't help but see this as a bad thing for the future of both companies. It's clearly a step towards a straight liquidation of assets in which the survival of existing molds and 2018 release plans is no longer assured. 

We'll know more Monday, but with the sale of the largest part of Hobbico to Horizon. The ability of what remains to keep operating beyond the end of next week will be limited.

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It goes without saying that after next Friday, April 6, Revell, Hasegawa,  and Italeri will no longer have a US importer since Hobbico held exclusive importation rights. Horizon did not acquire those rights in its purchase agreement.

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Can't say I am surprised by any of the news there. Revell/Monogram and even Revell Germany were going to be a tough sell, especially R/M, where almost all of their catalog is very elderly now. It just does not have value as a going model company, apparently. Bidders agree, or there would have been some. It's a shame the amount of money required is likely too great for a company like Round2 Models to bear; they would have been good stewards of the brands. I'd say the status of the plastic model divisions have moved from 'in serious trouble' to 'need a miracle' now to survive. 

 

I'm sure the import situation for the other brands will be resolved fairly quickly. We can hope no one is silly enough to turn to MRC, though. They progressively ruined the Tamiya, Fujimi, and Italeri brands in the US with their outrageous pricing. There would be no Tamiya America, if not for the damage MRC did to Tamiya in the 70s and 80s. Hope for the best here. 

 

Finally, I am not surprised that there were objections to the sale. There almost always are, even when things are not as bad as they were with Hobbico. And there are usually even more when the debt is huge, and the assets almost nothing, as they turned out to be here. I don't think this will be a serious issue going forward to Horizon's bid - it is just the last gasp of creditors who now see they are going to get absolutely nothing back now. 

 

 

Edited by Asmodai
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On 3/26/2018 at 6:37 PM, VMA131Marine said:

One item of concern is that Revell's largest creditor is a company in China owed over $1 million. This has to be the company that molds Revell's kits and has possession of the moulds. This could complicate any purchase of Revell USA.

Not all there molds are in china. My F-102 re-pop that i bought last year, was made in poland. There are both mold marks and a sticker inside the wing indicating that. 

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