Service Merchandise Gets Help
BRENTWOOD, Tenn. (AP) _ Service Merchandise Co., the struggling jewelry and home products retailer, said today it has obtained a $750 million financing commitment to revive its operations and return to profitability.
The company also said its chief executive officer and president Gary M. Witkin has resigned, and that a replacement will be named shortly.
The new funding, which is coming from Citibank, will help Service Merchandise make a three-week-late $13.5 million interest payment on its bonds, and pay down its $900 million credit facility from Chase Manhattan Bank.
Raymond Zimmerman, the former CEO whose parents founded Service Merchandise in 1960 in Nashville, has been named non-executive chairman of the Board of Directors.
``If we can meet our operational and financial challenges _ and we’re off to a great start with the new financing commitment _ we think we can return the company to profitability,″ Zimmerman said in a statement.
Shares of Service Merchandise doubled in morning trading, up 40 1/8 cents to 81 1/4 cents on the New York Stock Exchange. Last February, the company’s stock hit a one-year high of $2.56 a share.
Service Merchandise flourished into the 1980s, but the emergence of mega-discounters like Wal-Mart and other changes in the retail industry caused profits and stock prices to tumble.
The company restructured its operations last year, narrowing its product offerings to jewelry, housewares and furnishings and shifting from warehouse distribution to off-the-shelf sales. Service Merchandise operates 347 stores in 34 states.