Kmart Seeks to Change Loan Agreement With Creditors
DETROIT - Kmart Corp. has asked the US Bankruptcy Court for permission to increase the size of loss it could report -- before interest, taxes and depreciation -- from $100 million to about $400 million, Dow Jones reports.
The end of Kmart's first required reporting period is the end of this month.
"The company's sales have been slower to rebound than we had hoped," CFO Al Koch said Wednesday. "We don't want our vendors ... to be worried that we will fall below our covenant." Koch said he wasn't certain the Troy-based company would exceed a $100 million loss, but it was possible.
Most of Kmart's lenders expect to stay in the case until Christmas sales figures become available, said Marty Zohn, a bankruptcy lawyer with the Los Angeles law firm Proskauer and Rose.
The motion also sought permission to increase Kmart's line of credit by an amount not to exceed $500 million.
Koch said the company didn't project needing to use the additional credit but wanted to give vendors and others greater assurance that they would be paid.
"If we were to increase the line it would simply be a greater cushion," Mr. Koch said.
The term of Kmart's $2 billion credit line is 27 months, covering the retailer beyond its July 2003 target date for exiting Chapter 11 bankruptcy protection.
The end of Kmart's first required reporting period is the end of this month.
"The company's sales have been slower to rebound than we had hoped," CFO Al Koch said Wednesday. "We don't want our vendors ... to be worried that we will fall below our covenant." Koch said he wasn't certain the Troy-based company would exceed a $100 million loss, but it was possible.
Most of Kmart's lenders expect to stay in the case until Christmas sales figures become available, said Marty Zohn, a bankruptcy lawyer with the Los Angeles law firm Proskauer and Rose.
The motion also sought permission to increase Kmart's line of credit by an amount not to exceed $500 million.
Koch said the company didn't project needing to use the additional credit but wanted to give vendors and others greater assurance that they would be paid.
"If we were to increase the line it would simply be a greater cushion," Mr. Koch said.
The term of Kmart's $2 billion credit line is 27 months, covering the retailer beyond its July 2003 target date for exiting Chapter 11 bankruptcy protection.
