Mervyns Receives Final Approval of Its Debtor-in-Possession Financing

HAYWARD, Calif., Aug 26, 2008 (BUSINESS WIRE) -- Mervyns, the leading mid-tier department store chain in California and the Southwest, today announced that the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") granted final approval of the Company's $465 million debtor-in-possession (DIP) financing facility. The DIP financing was approved by the Bankruptcy Court with the support of the Creditors' Committee and all objections were resolved or withdrawn. The facility is being provided by a group of lenders led by Wachovia Capital Finance Corporation (Western) as agent. The Company previously received interim approval of the DIP financing facility from the Bankruptcy Court on July 31, 2008.

The DIP financing and cash generated from operations will be used to continue to pay vendors and employees, as well as to provide operational and financial stability as Mervyns proceeds with its restructuring. The Company is currently in compliance with all of the terms and conditions of the DIP financing agreement.

"The Court's approval of our DIP financing is a significant step in our reorganization process and one we are pleased to have accomplished," said John Goodman, Chief Executive Officer of Mervyns. "Our DIP financing provides Mervyns with the liquidity and stability it needs to continue serving our customers and meeting our obligations to vendors. With this final DIP financing in place and our financial position now strengthened, we are able to maintain our operations while continuing our discussions with creditors as we focus on emerging from bankruptcy."

Mr. Goodman concluded, "We appreciate the ongoing support of our loyal customers, trusted vendors, and hard working employees as we progress through our restructuring."

As previously announced, Mervyns will close 26 stores by late October or early November this year, with closing sales scheduled to begin on August 28, 2008. Mervyn's LLC (which operates the Mervyns business), together with Mervyn's Holdings, LLC (parent of Mervyn's LLC) and Mervyn's Brands, LLC (subsidiary of Mervyn's LLC), filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware on July 29, 2008. The lead case has been assigned case number 08-11586.

Source: Plain Vanilla Shell

Retailer Boscov's files bankruptcy, may be sold

NEW YORK (Reuters) - Department store chain Boscov's Inc filed for Chapter 11 bankruptcy protection on Monday and put itself up for sale, becoming the latest retailer to succumb to a weak economy and tight credit.

The Reading, Pennsylvania-based company and seven affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. It had $538 million of assets and $479 million of liabilities as of May 3, a court filing shows.

Founded in 1911, Boscov's describes itself as the largest family-owned, full-service U.S. department store chain, with 49 locations in Pennsylvania, Delaware, Maryland, New Jersey, New York and Virginia. It said it employs about 9,500 people and had sales of $1.25 billion in the year ended February 2.

Michael Hughes, a Boscov's executive vice president, said in a court filing the company plans to close 10 unprofitable stores and is exploring a possible sale to a third party.

He said Boscov's was hurt as the housing market collapse, skyrocketing energy and gas prices and higher food costs caused consumers to spend less on discretionary items. Hughes also said tighter credit market conditions have caused many vendors to tighten credit terms.

"The recent addition of these pressures and constraints to a broadline retailing industry that already operated on thin profit margins has forced the debtors into inadequate liquidity levels," he said.

Hughes said Boscov's has had productive talks with creditors and intends to emerge from bankruptcy as soon as the first quarter of 2009.

In a separate filing, Boscov's said it plans to arrange up to $250 million of financing to keep operating, with Bank of America NA as administrative agent. It said it also retained Lehman Brothers Inc to help it obtain new capital.

Boscov's joins more than a dozen retailers to go bankrupt in the last year, including Bombay Co, Goody's Family Clothing Inc, Linens 'n Things Inc, Mervyn's LLC, Sharper Image Corp, Shoe Pavilion Inc and Steve & Barry's LLC.

Source: Reuters

Mervyn's files for bankruptcy

In a move that has been rumored for weeks, Mervyns LLC filed for Chapter 11 bankruptcy late Tuesday.

Officials of the struggling Hayward-based department store chain said they plan to keep their 177 stores, including nine in the Sacramento region, open while they restructure the retailer's debt and "realign" business operations.

"Mervyns needs to reorganize its finances and operations due to the state of the economy and difficult operating environment for our industry," John Goodman, CEO of Mervyns LLC, said in a statement. "After careful consideration of available alternatives, the company's management board determined that a Chapter 11 filing was a necessary and prudent step that allows us to operate our business without interruption as we seek to restructure our debt and other obligations in a controlled, court-supervised environment. We are committed to serving our customers and maintaining regular operations as we undertake this reorganization."

The company also announced it has received a commitment for $465 million from a lender group led by Wachovia Captial Finance Corp., which will be combined with operating cash flow to fund its continuing operations.

Goodman, who became CEO of Mervyns LLC in March, remained upbeat despite the bankruptcy filing.

"The decisive action we are taking provides the company with the most effective means to restructure our operations, strengthen our balance sheet and position Mervyns to compete more effectively," he said. "I want to thank our customers and vendors for their continued support during this process... In addition, we are grateful to all of our associates for their hard work, loyalty and dedication. Our management team is committed to making this financial restructuring successful and leading Mervyns toward a bright future."

Mervyns LLC was created in 2004 after the retailer was sold off by former parent Target Corp. to a group of investment firms, led by Sun Capital Partners Inc. of Boca Raton, Fla., and Cerberus Capital Management LP of New York. Even when still owned by Target, the retailer, founded 59 years ago in San Lorenzo, struggled with increasingly stiff competition from a variety of rivals, ranging from Wal-Mart on the discount end to such mid-range department store chains as Kohl's and JCPenney.

The investment group has closed more than 70 Mervyns stores in the Midwest, South and Pacific Northwest during the past four years, but had also begun opening new locations in what was considered the retailer's core markets — California and neighboring states throughout the Southwest.

Source: Sacramento Business Journal

Is Mervyns on the Brink of Bankruptcy?

Retailer has reportedly stopped returning creditors’ phone calls

A struggling Mervyns LLC (Hayward, Calif.) may be on the brink of a bankruptcy filing.

According to a report in Women’s Wear Daily, “lenders and credit analysts are jittery about the future of . . . the $2.5 billion moderate-price regional department store chain.”

WWD noted that the retailer has been hurt by the housing implosion in California “and its core customers are being squeezed by rising gas and food prices, job cuts and tight credit.”

"We are currently advising all clients to hold orders," Bob Carbonell, chief credit officer for Bernard Sands, a credit-checking firm, told WWD. A Mervyns spokesman declined to comment.

Credit sources told WWD that the factoring arm of GMAC Commercial Finance has stopped approving orders of goods to the chain, which has 177 stores in seven Western states. An executive at GMAC declined comment.

WWD also said Mervyns has apparently stopped returning telephone calls to vendors, factors and credit-checking firms.

Mervyns was started in 1949 and was owned by Target Corp. (Minneapolis) until 2004, when it was sold to a consortium that included Sun Capital Partners Inc., Cerberus Capital Management LP and Lubert-Adler/Klaff for $1.65 billion. WWD said that Sun Capital is said to have agreed to buy the Lubert-Adler/Klaff stake, although the transaction is believed not to have yet taken place.

Source: VMSD.com