Kmart officials 'jubilant' as bankruptcy court OKs reorganization plan
Wednesday, April 23rd 2003, 12:00 am
By: News On 6
CHICAGO (AP) _ Fresh from securing court approval for its reorganization plan, Kmart Corp. is expecting to emerge within two weeks from the biggest retail bankruptcy in U.S. history.
``We will emerge as a vital enterprise, focusing on providing value to our customers and our stakeholders,'' Kmart President and CEO Julian Day told a news conference Tuesday, minutes after the reorganization plan was approved.
U.S. Bankruptcy Judge Susan Pierson Sonderby signed the confirmation order after negotiations Monday and Tuesday cleared away scores of objections to the plan from creditors, competitors and others.
``Let me say how jubilant I am, how jubilant everybody at Kmart is,'' Day said at the end of the four-day hearing.
The Troy, Mich., company expects to emerge May 5 from the largest retail bankruptcy in U.S. history. It sought Chapter 11 protection in January 2002 after a disastrous Christmas season and a plunge in its share price.
Kmart, which reported a $3.22 billion loss for fiscal 2002, closed 600 stores nationwide as it worked to return to profitability. It now has more than 1,500 stores and 180,000 employees.
The company's largest shareholder now will be ESL Investments, a $5 billion hedge fund that invests in retailers. ESL, which will own 49 percent of Kmart, is converting $2 billion in claims into stock and offering $109 million cash for operations.
One of the biggest obstacles to the court's approval was removed Tuesday when Capital Factors Inc. _ which held $20 million in unsecured Kmart debt _ reached a deal in which Kmart is to make various concessions and ESL is to buy an unspecified part of the debt.
Kmart executives have been optimistic about returning to profitability, but acknowledge there is still a long way to go as rivals such as Wal-Mart Stores Inc. and Target have locked up huge shares of the discount goods business.
Day said the revamped Kmart would offer a wider portfolio of private brands and tailor its products to local demographics.