NEW YORK (Dow Jones)--The New
York Stock Exchange is not certain
when it will complete its review of
Caldor Corp.'s (CLD) shares, which
haven't traded since Monday's close,
said exchange spokesman Ray
Pellecchia.
The company, which has been under
bankruptcy court protection since
September 1995, said in its
second-quarter earnings release
Monday that "while the plan of
reorganization has been proposed at
this time it would appear unlikely that
such a plan would provide for recovery
by equity shareholders." Caldor shares
closed Monday at 1 3/4. Pellecchia
declined to comment on the possible
outcomes of the exchange's review.
Caldor first said in December that it
was uncertain what, if anything, a
reorganization plan would provide for
equity shareholders when it presented
its five-year business plan to creditors.
Scott Donahue, who is a senior
managing partner at BDS Securities
L.L.C., which specializes in bankrupt
and distressed companies, said that
people in the distressed community
came to the conclusion long ago that
the shares would hold little, if any,
value.
"The equity is underwater," Donahue
said.
Donahue speculated that after Caldor
reorganizes, shareholders would
probably only get a securities package
of cash, bonds and stock worth about
5% of the reorganized company.
Pitney Hardin Sipp & Szuch senior
partner Robert Burrick, a lawyer who
deals with bankruptcy cases, said that
Caldor shares likely won't trade again
until a reorganization plan is confirmed.
Caldor was recently granted a
six-month extension of the exclusivity
period to file a reorganization plan,
which had been set to expire Sept. 1.
Now the company has until Feb. 28,
1998, to file the plan.
"You don't want some vulture guy to
come in and pick up all the stock at a
low value and then later have control
issues come into play," Burrick said.
Retail industry followers said the
competition Caldor faces from larger
discounters such as Wal-Mart Stores
Inc. (WMT), Kmart Corp. (KM) and
Dayton Hudson Corp.'s (DH) Target
division makes its survival uncertain.
"We have several small regional
companies such as Caldor or Bradlees
that are fighting for their lives," said
retail consultant Kurt Barnard.
S&P Equity Group analyst Karen
Sack, who used to cover Caldor, said
a major issue for Caldor is its size.
"You need to be awfully big to get the
lower cost structure you need to
operate," she said. |
