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Kmart Gets Lease Sale Approval

NEW YORK -- Kmart on Tuesday received the green light to proceed on a lease auction package valued at over $44 million, the day before its Bluelight.com site was set to get a new dot-com identity.<P>Bankruptcy court approval allowed Kmart to proceed...

NEW YORK — Kmart on Tuesday received the green light to proceed on a lease auction package valued at over $44 million, the day before its Bluelight.com site was set to get a new dot-com identity.

Bankruptcy court approval allowed Kmart to proceed with its deal for 53 lease interests to be sold to a joint venture among Kimco Realty Corp., Shottenstein Stores Corp. and Klaff Realty. Together the venture would pay Kmart $44 million plus potential profit-sharing in exchange for Kmart’s promise to only solicit bids for the entire package.

Developers Diversified Realty Corp. objected to the deal, contending that Kimco cherry-picked the best sites and that Kmart would do better if those sites were sold individually. The bankruptcy court in Chicago rejected the claim, ruling that Kmart used reasonable business judgment in agreeing to the package deal.

Separately, Bluelight.com is tightening its ties with its bankrupt parent by relaunching its site today as Kmart.com.

The name Bluelight, referring to in-store specials, was initially chosen to set the Internet operation apart from the retail division. The Web vehicle operates out of San Francisco, while Kmart is based in Troy, Michigan.

Richard Blunck, the head of the dot-com operation since May 2001, reportedly cut monthly losses to $1 million from $10 million. Kmart last summer bought the balance of the dot-com operation, or 40 percent, that it didn’t own before.

The one-time free service will continue its Internet Service Provider business, with the ISP charging $8.95 a month for unlimited access. The site has excluded most adult apparel merchandise because of low margins, but is expected to focus heavily on licensed products such as those from Martha Stewart and children’s apparel from both Disney and Sesame Street.

Last week, the bankrupt chain posted a $1.45 billion loss for the quarter ended May 1. Kmart in 2001 lost $2.42 billion.”