Campeau Mulls Options as Payment Deadline Looms
Undated (AP) _ Campeau Corp., facing a deadline today to pay for merchandise shipped to its department stores for the Christmas season, continued to study options to cope with its financial crisis.
The embattled Canadian company has looked into the possibility of postponing the deadline by informally asking certain suppliers if they would be willing to wait for their payments.
There has been widespread speculation among apparel makers, cosmetics companies and other suppliers that Campeau would not be able to pay its bills for goods sent to its U.S. stores between Thanksgiving and Christmas.
It is seen as a strong possibility that Campeau will put its U.S. retail divisions under bankruptcy court protection from creditors.
″We have been unofficially approached to find out if key vendors would agree to step aside or wait 90 days as a means of staving off bankruptcy while they wait to restructure,″ a spokeswoman for the cosmetics company Estee Lauder Inc., who asked not to be identified, said Tuesday.
Carol Sanger, a spokeswoman at Campeau’s corporate communications office in Cincinnati, confirmed that conversations have taken place between the company and certain suppliers.
But she said the possibility of extending the deadline on its merchandise bills was among numerous things the company was considering, but that no decisions had been made.
Sanger said Campeau’s board of directors met again Tuesday at the company’s headquarters in Toronto. The board also met Monday.
The sole announcement to emerge from the Toronto office by late Tuesday was word that two new members had been elected to Campeau’s board. Both were nominees of the National Bank of Canada, which acquired a 29 percent stake in Campeau last week after Chairman Robert Campeau defaulted on a bank loan to two of his private investment companies.
The addition of the two members increased the size of Campeau’s board to 12. The new members are Claude Ducharme, a partner in the Montreal law firm of Desjardins Ducharme, and Roger Smock, senior vice president for real estate and corporate banking-U.S. at the National Bank of Canada.
Several executives at clothing companies said they had not had any contact with officials from Campeau or its two U.S. retail divisions, Allied Stores Corp. and Federated Department Stores Inc., both based in Cincinnati.
But they indicated they would not agree to a delay in getting paid.
″We would have a very strong negative on that. We expect to get paid at the proper time and have no reason to extend ourselves any further than we have,″ said one executive at an apparel manufacturing company, who spoke on condition of anonymity.
Clothing manufacturers for the most part have suspended shipments to Campeau-owned stores while awaiting a clearer picture on Campeau’s financial condition. Federated and Allied have warned they might be placed under bankruptcy court protection.
Norman Fryman, president and chief operating officer of the Greif Cos., an apparel supplier, echoed the sentiment of others when he said, ″Our feeling right now is probably the best thing that they could do is to go for a Chapter 11 filing″ under the federal bankruptcy code.
Companies that file Chapter 11 can continue to operate and reorganize while under court supervision and protection from creditors.
Today’s deadline was the first of two days of reckoning for the debt- encumbered Canadian retailer and property developer.
By Monday, Campeau must persuade a group of banks that Federated and Allied are solvent. The banks, which had threatened to declare a loan of $2.34 billion in default last week, gave Campeau until Monday to prove its case.
Campeau amassed heavy debts in acquiring Federated for $6.6 billion in 1988 and Allied for $3.4 billion in 1986. The two store groups have more than $7 billion in debt related to the takeovers, some of it in loans from bank lenders and some in high-interest ″junk″ bonds.
In September, Campeau disclosed that Federated and Allied were running short of operating cash. The Canadian real estate company Olympia & York Developments Ltd. provided a $250 million loan to keep the stores afloat.
Campeau’s stock edged up 36 Canadian cents to close at $2.96 Tuesday on the Toronto Stock Exchange. In over-the-counter U.S. trading, Campeau gained 31 1/ 4 cents to close at $2.68 3/4 .
Federated’s chains include Abraham and Straus, Bloomingdale’s - which has been put up for sale - Burdines, Lazarus and Rich’s. Allied operates The Bon Marche, Jordan Marsh, Maas Brothers and Stern’s.