A group of former employees is acquiring Culver City-based Small World Toys Inc. out of bankruptcy for $12.5 million and taking it private.
The company which makes a diverse line of products for kids including brands like Ryan’s Room filed for Chapter 11 bankruptcy protection in August. It had been looking for buyers or financial partners following a failed acquisition attempt the company was counting on to boost sales.
Now Rivenrock Capital, a private equity firm, its financial partner, Kallina Corp., and Small World’s former chief operating officer, John Matise, have bought the toy company under a firm called SWT Acquisition LLC. Rivenrock was co-founded in 2004 by John Nelson, who is a former executive of Small World, and David Adams.
Eddy Goldwasser, who founded Small World Toys 45 years ago, will serve as a consultant to the company and as a director.
“This is an ideal acquisition,” said Nelson, who will be the new chief executive of Small World Toys. He said the company was “profitable for 40 years” until the last couple of years.
Goldwasser sold the company in May 2004 to Debra Fine, a longtime toy industry executive. Nelson helped navigate the toy company through the sale and stayed on for a few months for the transition.
Fine took the company public through a reverse merger with a publicly traded online sporting goods company. In her first two years, the company grew from $26 million in revenues to $34 million as a result of several successful acquisition. But after a failed attempt to acquire Milwaukee-based arts and crafts company called the Bead Shop in October 2005, the company suffered financial turmoil.
“This was a very big personal investment for me,” Fine said in an earlier interview with the Business Journal. She wouldn’t say how much she lost in the deal. “That acquisition was supposed to give us additional working capital and make us larger as a public company.”
Fine stepped down from the company the day before the company filed for bankruptcy and is no longer affiliated with it.
The new owners have working capital that stretches “well into the seven figures,” Nelson said. His plan for the company is to go “back to basics” in the near term.
“We are going to increase (individual product) count by 30 percent and get the warehouse totally stocked by 2008,” said Nelson. “The previous company was undercapitalized and unable to do that.”
Besides Nelson, Matise joins the management and will return to his former post, Adams will serve as chief financial officer, and Howard Bennett, a 26-year veteran of the company, has been promoted from senior vice president of sales to president.
