Kmart Receives Final Approval For $2 Billion Debtor-In-Possession Credit Facility
Approval Includes Authorization For Trade Creditor Lien
Company Continues To Make Progress In Reorganization Case
TROY, Mich., March 7 /PRNewswire-FirstCall/ -- Kmart Corporation (NYSE: KM) today announced that it has received final court approval for the full amount of its $2 billion debtor-in-possession (DIP) financing to help support the Company's continued operations, including the purchase of goods and services. The DIP credit facility is being arranged by a group of banks led by JPMorgan Chase Bank, Fleet Retail Finance Inc., General Electric Capital Corporation and Credit Suisse First Boston.
Charles C. Conaway, Kmart Chief Executive Officer, said, "We are very pleased to now have the full financing facility available as needed as we proceed with the company's reorganization. This additional funding, combined with existing cash flow from operations, offers added comfort to our vendors, associates and customers that we will continue to meet all of our post-filing obligations to them. With a stable financial footing, we can focus our energies on improving and enhancing our store operations, product offerings and customer service."
Final approval of the DIP facility also includes court authority for a second priority lien to be granted pursuant to the Company's Secured Inventory Trade Credit Program. This trade creditor lien, which is junior to liens under the DIP facility, is available to all vendors who resume normal trade terms and full merchandise shipments to Kmart by March 22, 2002.
"Court approval of the trade creditor lien is welcome news," Conaway said. "The response by the vendor community to our trade credit program has been very positive, and this added protection should further encourage continued support of Kmart by our vendors."
Kmart also received court approval for a number of other motions that will help advance the Company's reorganization. These include a motion that establishes procedures for the approval of the conduct of store closing sales and bidding procedures for the selection of a store closing agent. As previously announced, the Company is currently evaluating its store portfolio with the expectation that it will close a number of underperforming stores as part of its overall effort to enhance Kmart's financial performance.
The Company also received court approval to establish July 31, 2002 as the Bar Date, the deadline by which all creditors will need to file their proofs of claim as part of the Chapter 11 proceedings. Trumbull Services, LLC, serving as the noticing and claims agent in Kmart's case, has been approved by the court to distribute to all known creditors a notice of the Bar Date and proof of claim forms for submission. Creditors should receive these materials within the next few weeks.
Additionally, the Company received court approval to implement those parts of its Key Employee Retention Plan (KERP) that are targeted at mid-level executives, regional managers, store managers and pharmacists.
The court also approved today the Company's employment and retention of Ernst & Young Corporate Finance as a financial advisor and Abacus Advisory & Consulting Corp. as inventory valuation consultant. The court also approved the retention of law firms and financial advisors for the statutory creditor committees.
Conaway concluded, "There is still a lot of work ahead of us, but we continue to make steady progress in our reorganization and remain confident that we are on course for emergence in 2003."
More information about Kmart's reorganization case is available at the following toll-free numbers: Associates - (877) 638-8856; Customers - (877) 475-6278; Vendors and Suppliers - (877) 453-5693. The case has been assigned to the Honorable Chief Judge Susan Pierson Sonderby under case number 02B- 02474. Additional information on the case can be obtained via the Internet at .
Kmart Corporation is a $37 billion company that serves America with more than 2,100 Kmart and Kmart SuperCenter retail outlets and through its e-commerce shopping site, .
Safe Harbor Statement
The foregoing, as well as other statements made by Kmart, may contain forward-looking statements that reflect, when made, the Company's current views with respect to current events and financial performance. Such forward looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company's operations and business environment which may cause the actual results of the Company to be materially different from any future results, express or implied, by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the Company to continue as a going concern; the ability of the Company to operate pursuant to the terms of the DIP facility; the Company's ability to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted by it from time to time; the ability of the Company to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 cases; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the Company to propose and confirm one or more plans of reorganization, for the appointment of a Chapter 11 trustee or to convert the cases to Chapter 7 cases; the ability of the Company to obtain and maintain normal terms with vendors and service providers; the Company's ability to maintain contracts that are critical to its operations; the potential adverse impact of the Chapter 11 cases on the Company's liquidity or results of operations; the ability of the Company to fund and execute its business plan; the ability of the Company to attract, motivate and/or retain key executives and associates; and the ability of the Company to attract and retain customers. Other risk factors are listed from time to time in the Company's SEC reports, including, but not limited to the quarterly report on Form 10-Q for the quarter ended November 27, 2001. Kmart disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE: Kmart Corporation
Contact: Kmart Media Relations, +1-248-463-1021
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