10 March 2002
Kmart Corp (Kmart website Bluelight), Michigan-based $US37 billion retail chain, will seek court approval on 20 March to close 283 underperforming stores in 40 states & 1 in Puerto Rico. The company expects to gain $US550 million this year & $US45 million/year from the closures, improve ebitda by $US31 million/year, incur a charge of $US1.1-1.3 billion, and cause 22,000 job losses. Kmart filed for chapter 11 bankruptcy protection on 22 January, at the same time securing a $US2 billion finance package, enabling it to keep its 2114 stores open & start a restructuring programme it expected to run through to 2003. It got court approval for the finance package on Thursday. On Friday it announced the closure plans. Kmart sales fell 2.2% to $US8 billion in the third quarter to 31 October 2001, with same-store sales down 1.5%, and the company reported a $US224 million net loss ($US45 million net loss that quarter of 2000). It dropped 50 stores in the year to the end of October. Sebastian Kresge founded the business in 1899, listing it in New York in 1918. Its name was changed to Kmart in 1977.
Boykin Lodging Co, of Cleveland, didn’t pay a cash dividend for the fourth quarter of 2001, won’t pay one for the first quarter of 2002, and doesn’t expect to resume payments until the third quarter of this year. Boykin is a real estate investment trust that focuses on the ownership of full-service, upscale commercial & resort hotels. It owns 33 US hotels with major brand names.
Business advisory firm Grubb & Ellis Co has restructured its credit arrangements with its banking syndicate and withdrawn its registration statement for an $US11 million rights issue filed on 29 January.
5 March 2002
General Growth Properties Inc, of Chicago, has agreed to buy JP Realties Inc, of Salt Lake City, for $US1 billion — $US440 million cash, $US460 million assumed debt & $US116 million of preferred operating units. JP Realty owns or has an interest in 50 properties — 18 enclosed regional malls, 25 anchored community centres, 1 freestanding retail property & 6 mixed-used commercial/business properties containing a total 1.4 million mÂ² gross lettable area in 10 western US states. JP Realty’s mall occupancy averages 83% and 2001 sales averaged $US260/ftÂ² ($NZ6583/mÂ²). General Growth Properties already has 141 malls in 39 states. It increased fourth-quarter funds from operations by 15.1% and expects to generate an unleveraged 10% return on cost in its first 12 months of owning JP Realties.
4 March 2002
Japanese building company Sato Kogyo has filed for court protection from creditors with Â¥590 billion ($NZ10.45 billion) in group debt. That’s Japan’s biggest corporate failure this year.