Kmart in big reorganisation

  • Business
  • Wednesday, 26 Feb 2003

DETROIT (AP) - Kmart Corp. plans to use promotional pricing and its exclusive brands _ which currently include the Martha Stewart Everyday line of home fashions and Joe Boxer clothing _ to help it succeed in the discount retail market. 

In court documents released Tuesday at federal bankruptcy court in Chicago, where Kmart representatives appeared for a hearing, the company offered more details of its plans for emerging from Chapter 11 bankruptcy protection. 

"Kmart believes it can best maximize its performance and improve its market position by continuing to focus on driving profitable sales growth, controlling costs and streamlining overhead,'' the company said in the documents. 

The company expects to return to profitability in 2004. 

Kmart this week is seeking court approval of its revised disclosure statement, initially submitted last month, which includes a discussion of the events leading up to its bankruptcy and a summary of its reorganization plan. 

Approval of the statement by the court will allow Kmart to solicit votes from creditors on its plan. 

ESL Investments Inc., a hedge fund owned by Connecticut millionaire Edward Lampert, and New York-based Third Avenue Trust, will invest up to $353 million in exchange for stock, according to the documents. 

Kmart said ESL, which holds about $1.6 billion in unsecured debt claims, and Third Avenue, which holds about $178 million in claims, could have slightly more than 50 percent of Kmart stock after its reorganization. 

ESL oversees $5 billion in holdings. Lampert has been listed by Forbes magazine as the second-richest person in Connecticut, worth more than $800 million. He was abducted from a parking garage in Greenwich, Conn., on Jan. 10 and released unharmed two days later. 

Kmart, which plans to exit Chapter 11 protection by April 30, filed for bankruptcy on Jan. 22, 2002. 

Last month, the bankruptcy court approved Kmart's plans to shutter 316 stores, a move affecting at least 30,000 employees, and borrow $2 billion to help it continue operations post-bankruptcy. 

Last year, it closed 283 stores, affecting more than 22,000 workers. - AP 

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