Kmart to Avoid Credit Request
Aug. 23, 2002
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TROY, Mich. (AP) _ Kmart Corp. won't seek to increase its line of credit, saying that its current financing is sufficient, the retailer said Friday.
Earlier this month, Kmart said it was seeking permission to increase its line of credit by an amount not to exceed $500 million. Kmart's current $2 billion credit line is for 27 months, covering the retailer beyond its July 2003 target date for exiting Chapter 11 bankruptcy protection.
Kmart filed for protection from its creditors on Jan. 22 following disappointing holiday sales.
The retailer said Friday that its latest projections show that at the peak of its seasonal inventory buildup, it will have $1.1 billion in cash and available credit, allowing it to meet its post-bankruptcy obligations on time.
``Upon further analysis of the potential cost of expanding the DIP (debtor-in-possession) facility, particularly since we do not envision a need for the additional funds, we concluded that it would not be in the best interest of the company or our stakeholders to proceed further with the potential increase,'' said James Adamson, Kmart chairman and chief executive.
On Monday, Kmart announced it was eliminating nearly 700 jobs in a cost-cutting effort. The cuts include 400 employees at Kmart's Troy headquarters.
Kmart said the move will mean savings of $66 million for the 2002 fiscal year and $130 million annually. It will cost Kmart about $15 million in severance.
On the Net:
Kmart Corp., http://www.kmartcorp.com