Kmart's $2 billion exit financing credit will be launching to retail investors on April 3, keeping with the company's "fast-track" plans to emerge from Chapter 11 on or before April 30. The deal includes a $1.8 billion revolver and a $200 million "B" piece-- both priced at LIBOR plus 31/2%. A banker familiar with the GE Commercial Finance, Bank of America and Fleet Retail Finance-led facility said that the managing agent round, which began March 13, had exceeded expectations in commitment levels. Reportedly, agent commitment levels are near $1 billion. The asset-based deal is secured by inventory and will be used for ongoing capital needs after emergence. Calls to Fleet were not returned, while a B of A official and a GE spokesman declined to comment.
The deal is the same size and structure as the company's existing debtor-in-possession facility, led by J.P. Morgan. Last Monday, Kmart reported a net loss of $3.22 billion in fiscal 2002 versus $2.45 billion in 2001 (see story, page 4). Julian Day, president and ceo of Kmart, said in an announcement that the company still remains focused on achieving a cost structure and organization that is aligned with the mass merchandising retailers reduced store base-- Kmart closed 283 stores in the second quarter of fiscal 2002. "Creditors are in the process of voting on our first amended joint plan of reorganization, and we anticipate the plan will be confirmed in mid-April and the company will complete its Chapter 11 reorganization by April 30, 2003," he explained. Calls to a Kmart restructuring officer were not returned.