Please Touch Museum Reaches Settlement to Resolve Longstanding Debt Issue
Museum will embark on a $10 million fundraising effort to fund the settlement and will remain fully operational as both a world-class children's museum and high-quality event space
PHILADELPHIA, Sept. 11, 2015 /PRNewswire-USNewswire/ -- After two years of negotiations to restructure roughly $60 million in bond debt, the Please Touch Museum announced today that it has reached a settlement with a majority of its bondholders. The Museum then filed a Chapter 11 case in US Bankruptcy Court in Philadelphia to implement the settlement.
Under the terms of the settlement the Museum will mount a $10 million fundraising campaign that must be completed by March 2016, at which point the reorganization process can be finalized. The Museum will remain fully operational as both a world-class children's museum and high-quality event space throughout the period. Visitors' experience will not be affected by the process.
"Today's filing puts Please Touch Museum on a path towards even greater success," said Sally W. Stetson, Chair of the Board of Directors. "To be very clear, the Museum will remain open. We are simply entering into a process to resolve the institution's debt and position ourselves for lasting growth and sustainability. When the process is complete, the Museum will be on stable financial ground, have a strong foundation for the future and offer expanded programming."
The bondholders will receive approximately $11 million under the terms of the consensual resolution, substantially less than the total amount owed but still a larger return for them than if the filing had been contested.
The $10 million to be raised will fund a portion of the settlement, restructuring fees, working capital through the proceedings, and two years of contributed revenue that will support enhancements throughout the institution.
"We are glad to have reached mutually agreeable terms with the bondholders," Stetson said. "The negotiations lasted for so long that it placed the Museum in a sort of limbo. Today's filing allows us to move forward once and for all."
Shortly after moving to Memorial Hall in 2008, the Museum fell victim to a perfect storm of financial issues. The recession led to a shortfall of millions of dollars in fundraising related to the move. In addition, the value of the building that previously housed Please Touch Museum had to be sold for half its estimated value, meaning a loss of several more million. As a result, the Museum has been in default on its bond debt since 2013.
The significant level of bond debt made it difficult for the Museum to advance its mission of helping children "learn through play." Fundraising efforts have been hampered by the bond debt, which has prevented the Museum from being able to improve and update exhibits.
"The past two years have been challenging," said Lynn McMaster, President and CEO of Please Touch Museum. "But we are all relieved to be heading towards a resolution of our financial situation. Knowing that those issues will be behind us, we can focus more intently on our mission and the children we serve. We are counting on our donors, who believe in the vital role we play in the region, to support our efforts and ensure that the museum is here for years to come."
Despite the challenges it has faced, the Please Touch Museum has remained a high quality, nationally renowned institution that is widely considered among the top children's museums in the country. It continues to be a top ten tourist attraction in Philadelphia, attracting nearly 500,000 annual visitors and generating a $20 million regional economic impact, as well as $3.5 million in city and state tax revenue.
The Museum has proven that it can be self-sustaining and financially stable once its debt is retired. Since relocating to Memorial Hall, the Museum has demonstrated that it can reliably raise 85% of its operating budget from admissions, events and sales, and is confident it can raise the other 15%, plus funds to update exhibits.
"The fact that we have been able to sustain more than triple the annual attendance since our move from Center City proves our value in this community and region," McMaster said. "We are truly an invaluable asset to the Philadelphia area's children, a lynchpin to West Fairmount Park's vibrancy and a revenue generating cultural gem."
A plan has been developed for ongoing exhibit renewal and replacement through 2026 to ensure that the Please Touch Museum remains a viable and modern asset. The financial reorganization clears the way for the plan to be implemented.
Please Touch Museum is dedicated to enriching the lives of children by creating learning opportunities through play. Recognized locally and nationally as one of the best children's museums, PTM is open Monday through Saturday from 9 a.m. until 5 p.m. and Sundays 11 a.m. to 5 p.m. Admission is $17 for adults and children age one and over. Children under one are free. For more information, please call 215-581-3181, or visit our website at www.pleasetouchmuseum.org.
SOURCE Please Touch Museum
Share this article