Dueling accusations of who did a worse job running LL Flooring â its founder or its current executives â come to a head this week as the troubled company warns it may not be generating enough cash flow to meet the terms of its $200 million credit line.
It could be the most bitter boardroom battle for control of a Virginia-based company in years.
Henrico County-based LL Flooring has been struggling with soft demand and a U.S. Customs hold on some of its products.
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LL Flooring, formerly known as Lumber Liquidators, has a store at 8818 W. Broad St. in Henrico County. The company, which is based in Henrico, has been struggling with soft demand and a U.S. Customs hold on some of its products.
LL Flooring has lost money for seven quarters in a row, and it said last month that it has opened bidding for the sale of its Sandston distribution center while it negotiates with its lenders because it believes it may not have the financial reserves required to back its revolving facility credit agreement â basically, a $200 million credit line.
âLL Flooringâs current ineffectual leadership has overseen staggering operational losses and clung to a failing strategy that has placed the Company on the verge of bankruptcy,â wrote Thomas Sullivan, who founded the company, then known as Lumber Liquidators, in one of several letters to stockholders.
The board said in one of its letters to stockholders that during Sullivanâs time leading the company, its âprevious name and branding of âLumber Liquidatorsâ was permanently tarnished.â
The board letter said: âFrom the time of an FBI raid in 2013 related to potential environmental crimes through Mr. Sullivanâs departure from the Board and Company, LL Flooringâs share price declined approximately 86% and the Company lost approximately $3 billion in market capitalization.â
Sullivan is seeking election to the board, along with two other candidates at the companyâs annual meeting on Wednesday, while removing three directors of the current nine-member board, including board chair Nancy M. Taylor. His FP Investments LLC owns 8.85% of LL Flooringâs shares.
Henrico-based LL Flooring get another, still lower, takeover proposal
Sullivan is also seeking to replace Douglas Moore, CEO of CleanCore Solutions and an LL board member since 2006 â he was on the board when Sullivan led the company â and Ashish Parmar, a board member since 2021 and senior vice president of Standard Industries Inc.
Sullivan said LL Flooring needs new board members âwho bring proven leadership ability, shareholder alignment, and an actionable plan to reverse years of mismanagement and set LL Flooring on the path to profitability.â
LL Flooringâs board fired back with this: âIn our view, Mr. Sullivan has a highly questionable ethical and leadership track record and is pushing a personal agenda that is not in the best interests of all the Companyâs shareholders.â
Sullivan has blasted the current board for the slide in share prices this year and says its strategy to cope with a sluggish home improvements market is failing.
The board says Sullivan has indicated he plans to return LL Flooring to the strategy it followed while he led the company, which the board said limited the companyâs business to sell only hardwood and laminate flooring, focusing on the do-it-yourself market. The board has been moving into other types of flooring and the contractor market.
The board added: âMr. Sullivan is conflicted and pushing a personal agenda to opportunistically acquire LL Flooring: Mr. Sullivan may be attempting to force a sale of LL Flooring to himself at a price that may undervalue the Company by installing himself and two of his hand-picked employees on the Board.â
Sullivan and his firms, Cabinets to Go and F9 Investments LLC, bid to acquire LL Flooring last year, initially offering $5.76 a share.
The LL Flooring board formally rejected that offer.
In November, Sullivan sent a letter to LL Flooringâs board proposing to acquire the firm for $3 a share. That offer went nowhere.
This spring, meanwhile, Live Ventures Inc., a Las Vegas-based holding company, offered to acquire LL Flooring for $2.50 a share. At the time, that was 60% above the price of the companyâs shares. It closed Friday at 56.37 cents.
Last year, Live Ventures had offered to acquire LL Flooring for $5.85 a share.
LL Flooring said last year that it was conducting what it called a strategic alternatives review, saying the board launched this process after receiving âmultiple inbound expressions of interest regarding a potential transaction.â
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