TROY, Mich. (Reuters) - Kmart Corp. on Tuesday filed for bankruptcy protection after a dismal holiday sales season and stiff competition from rivals Wal-Mart Stores Inc. and Target Corp. left the discount retailer strapped for cash.
The retailer said it had secured $2 billion in debtor-in-possession financing and its 2,100 stores will continue to operate as it restructures its business.
Wall Street analysts had expected the 105-year old chain to file for Chapter 11 bankruptcy protection. The Troy, Michigan-based company, which has 2,100 stores and 250,000 employees, had suffered through a series of debt downgrades in recent weeks that raised its borrowing costs.
On Monday, Fleming Cos., a major supplier, stopped shipping goods to Kmart stores because the Kmart failed to make a regular payment. Moody's Investors Services also downgraded Kmart's debt on Monday to a lower ``junk'' status, saying the retailer' chances of getting outside financing were dwindling.
Kmart, the No. 2 discount chain behind Wal-Mart, had been in talks with its lenders and to seek additional financing.
The company's stock has been in a free fall, losing two-thirds of its value since January. The stock is currently trading around a 38-year low. |
