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AMES TO EXTEND CREDIT LINE

NEW YORK -- Bankrupt Ames Department Stores stands to gain an additional $25 million in liquidity from two new agreements, one with its debtor-in-possession lenders and the other with KRC Acquisition Corp.<P>The two new agreements, which still...

NEW YORK — Bankrupt Ames Department Stores stands to gain an additional $25 million in liquidity from two new agreements, one with its debtor-in-possession lenders and the other with KRC Acquisition Corp.

This story first appeared in the June 18, 2002 issue of WWD.  Subscribe Today.

The two new agreements, which still require Manhattan bankruptcy court approval, will provide Ames with $25 million for unrestricted use in its retail operations. A court hearing has been set for Wednesday.

At the time of its Chapter 11 filing on Aug. 20, 2001, Ames secured a $755 million DIP arrangement. The agreement with its lenders, led by GE Capital as agent, involves an amendment to its current DIP financing facility. The agreement with KRC, an affiliate of Kimco Realty Corp., involves the sale and leaseback of certain properties. In the original DIP facility, $700 million was provided by GE Capital and $55 million from Kimco Realty. No other details concerning the additional $25 million — such as allocation between the two groups — were provided by Ames.

Joseph R. Ettore, Ames chairman and chief executive officer, said in a statement: “Together with our continued reductions in [selling, general and administrative] expenses, this new funding substantially improves our financial position and provides our vendor partners with the comfort level they need to continue extending credit and merchandise shipments.”

Ames, a regional discounter, posted a loss for the year ended Feb. 2 that widened to $813.1 million on sales of $3.25 billion, compared with a year-ago loss of $240.6 million on sales of $3.95 billion.

The retail chain operates 333 stores, mostly in the Northeast and Middle Atlantic states. The company retains the exclusive right to file a plan of reorganization until Feb. 28, 2003, but has said that its goal is to exit bankruptcy proceedings later this summer.

Although Ames has closed stores as part of its restructuring, the chain’s merchandising mix and “high/low” pricing strategy has remained largely unchanged. As a percentage of sales, softlines account for 32 percent of its volume.