Service Merchandise Receives Approval to Extend Exclusivity Period through April 2001
NASHVILLE, Tenn.--(BUSINESS WIRE)--Feb. 2, 2000--
Time to Assume or Reject Real Estate Leases Extended
Through March 2001
Company Posts Preliminary Gross 9-Month EBITDAR of $62 Million
Sets May 15, 2000 Claims Filing Deadline
Service Merchandise Company, Inc. (OTC:SVCDQ) announced today that it has received Court approval to extend the period in which the Company has the exclusive right to file and advance a plan of reorganization in its Chapter 11 case to April 30, 2001 and further extend the Company's exclusive right to solicit acceptances of its plan to June 30, 2001.
"Consistent with the strategic reorganization timeline established in the first quarter of 1999, the extension of exclusivity should enable the Company to complete and implement its Year 2000 Business Plan, which will serve as the basis for its reorganization plan and emergence from Chapter 11 in 2001," said Chief Executive Officer Sam Cusano.
The Court also extended the Company's time to assume or reject executory contracts and unexpired real property leases in connection with its go-forward stores as to 11 objecting landlords through March 31, 2001.
Although it is still in the process of finalizing its December results and annual audit, the Company provided the Court with preliminary 1999 results. Those results, as subsequently refined, indicate gross EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring charges) of approximately $62 million for the nine months ended December 31, 1999 -- exceeding its 1999 Business Plan by $19 million or 44 percent -- based on preliminary financial information.
Since the commencement of the Company's voluntary Chapter 11 case in March 1999, it continues to make significant progress in its restructuring initiatives:
-- Vendor support has improved significantly. Substantially all jewelry vendors and more than 60 percent of hardlines vendors are now extending payment terms to the Company, and the extension of exclusivity is expected to help to continue vendor support throughout the 2000 retail cycle.
-- Customer relations improved through the refocusing of the stores' merchandise mix, the reestablishment of a private label credit card program and the reduction of out-of-stock occurrences from 14 percent at the commencement of the Chapter 11 case to 2 percent at the onset of the 1999 holiday season.
-- Beginning in March 1999, 122 underperforming stores were closed. Inventory liquidation sales at those locations surpassed projections, generating approximately $100 million in net proceeds.
-- The Company sold its interests in 76 previously-closed store locations and other surplus real estate properties throughout the country to various retail chains, real estate developers and landlords, generating more than $76 million of net cash proceeds. Service Merchandise also divested its B.A. Pargh Company, Inc. subsidiary, resulting in approximately $8 million in net proceeds.
-- During 1999, the Company reduced its corporate workforce by some 250 positions and closed two distribution centers and five regional jewelry repair centers to adjust the cost structure to correspond with the existing store base, resulting in annualized savings of $25 million.
-- Liquidity remains strong. Throughout the critical fall season, liquidity remained very strong, with minimum availability of $150 million at peak inventory and maximum excess availability of more than $400 million.
"While much hard work remains ahead, based on the Company's achievements during 1999, we believe Service Merchandise is well-positioned to move forward in developing a foundation for the completion of its restructuring and its exit from Chapter 11 early next year," Mr. Cusano stated.
In other action at the Company's regular monthly hearing on January 25 and 26, the Court designated May 15, 2000 as the Bar Date, or deadline for filing creditor claims. The Company intends to mail the Bar Date Notice and Proof of Claim forms to all known creditors by March 15, 2000.
Service Merchandise and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville on March 27, 1999.
Service Merchandise Company, Inc. operates 221 stores in 32 states. Customers may also shop by phone at 800-JEWELRY and on the web, at www.servicemerchandise.com. |
