Harden Furniture has been operating at this site at 8550 Mill Pond Way in the Oneida County hamlet of McConnellsville since 1844.
McConnellsville, N.Y. -- Harden Furniture CEO Gregory Harden says a crushing debt load brought on by a leveraged buyout led to the 174-year-old furniture maker's pending foreclosure sale.
Harden, the fifth generation of his family to lead the company, said he decided in 2016 that he needed an equity partner to provide the cash needed for the company's modernization.
After 52 straight years of profitability, Harden saw its revenues cut in half during the Great Recession of 2008 and began losing money. Even worse, banks, suddenly adverse to any sort of risk, refused to renew the company's line of credit, even as its orders gradually recovered from the recession, Harden said.
"They said to come back when you're profitable," he said.
Miramar Capital Partners, a private equity firm that invests in manufacturers, acquired 75 percent of the company on June 13, 2016, for an undisclosed price. Harden, who bought out the ownership interest of other Harden family members in 2011, retains 25 percent of the company.
But Miramar put no cash of its own into the company, Harden said. Instead, Miramar borrowed all of the money it used to buy its majority share - at annual interest rates that, with fees and penalties, came to more than 20 percent - and put in nothing to modernize the company's factory or to make acquisitions of other furniture makers to expand its market share, he said.
"Every nickel, all of it, was borrowed," said Harden
It turned out to be a huge mistake.
For the first time in its history, Harden Furniture, long known for making high quality solid wood and upholstered furniture, found itself heavily burdened by debt. Within six months, despite increasing sales, especially in its commercial business, it began falling behind on its debt payments, Harden said.