Levels for Kmart's bank debt continued to plummet after the company released second quarter financial results on Sept. 16. Traders quoted the paper in the 27-31 range last week, down from a wide bid-ask spread of 30-40 two weeks ago, and one dealer noted that a small piece of the company's bank debt had traded around the 28 level.
Kmart announced a net loss of $333 million in the second quarter of 2002, excluding non-comparable items, discontinued operations and reorganization items. The company also said that its net sales for the 13-week period ending July 31, 2002 decreased by more than 15% compared to last year. At the end of August, however, Kmart still had $830 million in cash and full availability under its $1.5 billion debtor-in-possession credit facility. Calls to Albert Koch, cfo, were referred to a spokesman, who did not return calls by press time.
Kmart's bank debt began dropping after the company filed a motion to amend its DIP facility in mid-August. Previously, the paper had settled into the 60s.