According to market sources, Chuck Conaway and Mark Schwartz, ceo and chief operating officer of the company, respectively, may be facing unscheduled departures as the pressure on Kmart mounts. Among the names mentioned in the marketplace as possible successor candidates are former Kmart vice chairman Michael Bozic, current Kmart director James Adamson and former Hills executive Peter Thorner. At press time, Adamson had the inside track.
Financial sources said the bank deal put on the table at the end of the board’s session on Tuesday included a $1.5 billion secured line of credit on top of the existing $1.5 billion unsecured line.
Other sources said Kmart continued this week to increase its borrowing under the current line. At the end of last week, Kmart had borrowed close to $900 million of the $1.5 billion unsecured line, and has borrowed more this week. A credit source said that the proposed bank facility would give Kmart a combined $3 billion line of credit, “more than enough to fund back-to-school merchandise and get the company through the holidays.”
Officials at Kmart declined comment on the executive and financial reports.
Adamson, 53, has experience in the food services and restaurant franchise sector. He retired as chairman of Advantica Restaurant Group, formerly Flagstar Corp., last month. His previous posts include ceo of Denny’s Inc. and Burger King Corp. He has served as a Kmart director since 1996.
Bozic was at one point expected to succeed Floyd Hall as ceo of Kmart before Conaway got the nod in June 2000. Bozic, who retired as vice chairman in October 2000, is a 37-year retail veteran, having held high-level posts at mass retailers such as Sears Roebuck & Co., Hills Department Stores and Levitz Furniture Corp.
Thorner, whose most recent gig was as head of the defunct Bradlee’s Department Stores, is a favorite of factors and vendors because of his accessibility and management style, which includes close contact with the financial community.
However, Bozic, a source said, is unlikely to want to return to Kmart. Thorner, several others said, could be interested but has not yet been approached by Kmart. More importantly, Thorner, according to two financial sources, has said he won’t take the job unless it includes a bankruptcy filing and the closure of at least 400 stores.
Earlier this month, Kmart hired PricewaterhouseCoopers as consultants, most likely to review which stores should be shuttered. The discounter is also said to be looking for a financial adviser.
Shares of Kmart, which was removed from the S&P 500 list Tuesday, dropped as low as $1.26 in intraday trading before rebounding to $1.60 in composite trading on the New York Stock Exchange. In other market news, bank debt was in the 75-cent range, and bonds were hitting the 50-cent range, both also at all-time lows. Both Moody’s and Standard & Poor’s downgraded Kmart’s debt, already at junk levels, on Wednesday.