Ames looks to emerge from Ch. 11 this year
Staff -- Home Textiles Today, 1/21/2002 12:00:00 AM
ROCKY HILL, CT —
After a strong holiday season and months of cost-cutting, Ames Department Stores, which filed Chapter 11 in August 2001, said it plans to emerge from bankruptcy this year. The discount retailer met with its statutory creditors committee on Jan. 10, and both have announced that they are working toward a consensual plan of reorganization toward this goal.
The committee was pleased with how Ames has operated under Chapter 11 so far, its ability to emerge from bankruptcy, and its working relationship with the committee. Ames has recently focused on its problem areas and so far has closed 151 stores and one distribution center. The closing of unprofitable stores together with the contemplated conversion to equity of all of Ames' obligations to unsecured creditors will contribute significantly to Ames' restored profitability, the company said. It also anticipates that all existing equity will be cancelled.
Ames also announced the receipt of a proposal from GE Capital to provide exit financing in connection with the plan of reorganization. As currently contemplated, it said, a junior lien will be provided to the vendors that provide trade credit to the company after it emerges from reorganization. Ames also told the committee that it is in compliance with all financial covenants under its debtor-in-possession lending agreements.
In addition, Joe Ettore, chairman and ceo, Ames, told the committee, "Ames has had a successful holiday season in all respects including sales, gross margins and earnings. The Chapter 11 process that started five months ago has enabled Ames to close underperforming stores and streamline operations. It will also permit the company to reduce debt and create an attractive balance sheet so that Ames can excel as a major regional discounter. We are very pleased by the strong support that some vendors have already started to provide and look forward to a strong working relationship with them in the future."
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