Category Archives: RC Radio-Controlled

Hobbico Pre-Auction Stunner—Cross-Town Competitor Horizon Hobby Declares It Will Purchase Major Assets of Struggling RC Co.

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Meet the New BMOC in RC—Horizon Hobby. (Photo: Cameron Suhadolnik)

If Successful, “Purchase Would Close on April 6”

In a quick follow-up to our previous post about the fall of Hobbico, one of its main RC industry competitors, cross-town rival, Horizon Hobby, has made a substantial offer that may pave the road to Hobbico’s final financial destination. According to Ben Zigterman of the News-Gazette:

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Ben Zigterman, reporter for the News-Gazette (Photo: Ben Zigterman)

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“CHAMPAIGN — Hobby-product distributor Hobbico has found a buyer for its remote-control business: cross-town competitor Horizon Hobby. Horizon Hobby has agreed to buy several units of Hobbico for a combined $18.8 million…‘We believe this transaction, if completed, will further strengthen Horizon’s position as the market-leader in the RC industry,’ Horizon Hobby President and CEO Joe Ambrose said in a statement. ‘Horizon and Hobbico have served many of the same retailers and customers for years. Upon completion of this transaction, Horizon will work to provide a smooth transition within the industry.’ If completed, Horizon will be buying Hobbico’s Great Planes and Tower Hobbies divisions, as well as brands including Axial and Arrma. Hobbico had been asking for at least $22 million for these companies. The purchase won’t include Estes, United Model, Revell US or Revell Germany.

Additionally, ‘Horizon will not be assuming any of Hobbico’s debts or other liabilities in this transaction,’ Ambrose said. Following the auction, where Horizon would be the stalking-horse bidder, the purchase would close April 6. With a stalking-horse bid, the potential purchasers essentially set the floor bid of the auction in exchange for certain protections. If Horizon isn’t the successful bidder, it will receive a break-up fee of 3% of its base bid, or $540,000.”

Bottom Line: Once all of the auctioneering and legal “smoke” has finally cleared, it appears certain that Horizon Hobby will emerge the only so-called “winner” in this calamitous scenario. Hobbico was asking for $22 million, but $18.8 million comes pretty close. After the sale closes on April 6th, Horizon assumes the mantle of BMOC (Big Man on Campus) among all remaining companies in the RC hobby’s industrial complex. A big shout-out of THANKS to Ben Zigterman for his excellent reportage on this story. And we’d also like to wish everyone at Hobbico and Horizon all the best and sincerely hope that Hobbico is the LAST major (toy-related) company “domino” to fall.

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Selling “All Assets” to Highest Bidder—Hobbico Prepares to Take the Next (and Saddest) Step in its Own Arduous Chapter 11 Bankruptcy Proceedings

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It’s Hammer Time!— Everything at Hobbico must GO, and go it shall, to the highest bidder at an auction being held March 29th in Chicago. Will the RC giant survive? (Photo: auctionclipart.com)

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Picking up the Pieces— What will remain for RC fans after Hobbico’s demise? Repairing a crashed 1:6 scale RC vehicle or plane may get a LOT more expensive once the company has liquidated all of its assets and parts become scarce. (Photo: rcplanecrashes.com)

While news of the imminent collapse of Toys ‘R Us continues to dominate national news headlines, another more local, but no less important story, is shaking fans and collectors of 1:6 scale RC aircraft and vehicles to their very core. We’re talking again, of course, about the upcoming demise of Hobbico, (formerly) one of the RC hobby’s leading manufacturers and distributors. Hobbico’s troubles hit very “close to home” around here. That’s because they’re headquartered just a few miles up the road from our offices here in central Illinois, Champaign-Urbana (C-U) to be exact. As such, we see and hear news that is related to Hobbico probably a little more often than the rest of the country, but the impending loss of ANY 1:6 scale product manufacturer—and employer—will undoubtedly send economic “ripple effects” outside of our local community, into the worldwide “toy economy” as well. Today’s updates come to us from News-Gazette reporter, Ben Zigterman, who provides the following intel on the company’s upcoming liquidation auction:

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Ben Zigterman, reporter for the Champaign-Urbana News-Gazette (Photo: Ben Zigterman)

“Having filed for bankruptcy protection in January, Hobbico plans to auction its assets March 26 in Chicago in a bid to find a buyer. The hobby-product distributor, which employs more than 300 people in the county, placed ads Wednesday in The News-Gazette and USA Today with notices of the auction, as required by the bankruptcy process. In the past couple days, former employees also told The News-Gazette they had received notices about the auction, which will be followed by a hearing on March 28. When Hobbico filed for Chapter 11 bankruptcy protection, it said it had added too much debt and faced ‘an increasingly competitive industry, market headwinds and a series of one-off events with key suppliers.’ It also said that it had an estimated 200 to 999 creditors, $10 million to $50 million in assets, and $100 million to $500 million in liabilities. In recent court documents, Hobbico also indicated it had $114 million in revenue in 2017, down from $175 million in 2016. Hobbico asked for a minimum bid for all the assets at $38 million, or less than that for different parts of the business, according to court documents.”

hobbicologoBottom Line: This latest, saddest phase of Hobbico’s Chapter 11 bankruptcy saga parallels the similar travails currently going on at Toys ‘R Us, which is unsettling to many, to say the least. The March 26 auction up in Chicago will completely hand the reins of Hobbico over to whomever (or whatever) “new ownership” may step in, and those new owners must then decide the fates of hundreds of hard-working employees and what—if anything—can (and will) be done to keep the company afloat.

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RC Hobby Shocker!—Hobbico Files For Chapter 11 Bankruptcy Protection As Declining Consumer Interest Continues to Impact Already Struggling Toy Industry—Softening Drone Market Also Cited

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How the Mighty Are Falling— As this aerial view reveals, the Hobbico headquarters building located in Champaign, IL, is literally MASSIVE in terms of its size and employment. Unfortunately, declining consumer interest in its RC hobby products has now forced the company to file for Chapter 11 bankruptcy protection in US Federal Court. At this location alone, 332 Hobbico employees currently face (possible) termination. Other toy and hobby companies are similarly threatened, and many toy industry observers have begun to wonder if an entire leisure pastime (playing with toys) has begun to die a slow death—one GIANT business at a time. (Photo: Google Earth) Click to enlarge.

Downward “Domino Effect” From Falling Toy and RC Sales Being Felt Industry-Wide

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First, Toys ‘R Us filed for Chapter 11 bankruptcy (see HERE). Then, Hasbro and Mattel both raised their own corporate “red flags,” warning of impending financial difficulties (see HERE). And yesterday, Hobbico, the LARGEST hobby product distributor in the United States, announced that it too, has filed for Chapter 11 bankruptcy protection against its own horde of (unhappy) creditors. In an article published in today’s News-Gazette, reporter Ben Zigterman reveals the shocking financial figures:

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“In its filing with the U.S. Bankruptcy Court in Delaware, Hobbico said it has an estimated 200 to 999 creditors, $10 million to $50 million in assets, and $100 to $500 million in liabilities.”

Fans and Collectors of 1:6 Scale Should Take Heed

Ouch! Those numbers sting. With a mere $10-50 million in assets and a debt of as high as $500 million, the future of Hobbico does indeed look bleak. And if an RC-industry giant such as Hobbico fails, it’s death knell must certainly serve as some sort of “canary in the coal mine” warning to our own (beloved) 1:6 scale hobby. Seriously, if you think about it, there is actually very little separating the two hobby’s fields of interest For example…

We love our 1:6 scale action figures, vehicles, dioramas, and the imaginative world of indoor and outdoor playtime they inspire, correct? Well, all of that joy overlaps (in many cases) with very similar products (and activities) provided by our compatriots in the RC hobby world. For many on both sides, the activities of our two related “communities” are conveniently, inextricably, and forever—linked. The truth is undeniable. RC tanks, planes, boats, cars, drones and other such vehicles are ALL a common sight at today’s GIjOE-centric toy shows. And why not?

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A Perfect Blend of Two Hobby Worlds— As this photo clearly demonstrates, the combined use of RC vehicles and action figures has always been a “no-brainer.” (Photo: Ron Stymus)

Sadly, today’s article in the News-Gazette also goes on to report:

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“…it is possible that there will be a permanent shutdown of all Hobbico operations and locations and the permanent termination of all Hobbico employees…” —Howard Salazar, HR Director, Hobbico

Surprisingly, decreasing sales of RC drones are also (partially) to blame for Hobbico’s current financial dilemma. Only a couple of years ago, the prevailing belief was that RC drone sales would continue to skyrocket well into the future. Unfortunately, it appears that the public’s interest in this relatively new market segment has already begun to wane. According to Salazar:

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“After a strong prior year, a softening of the overall drone market in 2016 led to substantial declines in sales for Hobbico.”

Bottom Line: Despite the country’s current robust economy, the end (sadly) appears to be coming soon for both Hobbico and Toys ‘R Us. Hopefully, other toy and RC industry giants will hear the bellwether ring of these impending business closures and make whatever strategic corrections are necessary to ensure their own survival.

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