Boscov’s Inc.’s hopes of survival in family hands advanced Tuesday night when Atlantic County, N.J., freeholders voted to guarantee a $3 million federal loan to help complete the $300 million refinancing of the 39-unit department store chain.
The Department of Housing and Urban Development, which would process the loan, requires two public hearings and a 30-day comment period to allow for public reaction, which is expected to stretch out the process to about six weeks.
Final approval would authorize the county to amend its Community Development Block Grant to support the guarantee. No county money would be directly involved.
James Curcio, chairman of the nine-member freeholder board and the sole negative vote, said, “There were good arguments on both sides because we had never done anything like this before for a private business.”
Freeholders expressed concerns about setting a “dangerous precedent” should other private businesses be in the same situation but without the resources available to Boscov’s, Curcio said, citing Pennsylvania’s guarantee of $35 million in federal loans. The family, led by chairman Al Boscov and president Edward Lakin, has contributed $53 million in equity.
At the meeting, Boscov emphasized that the county’s help was essential to help the chain survive, Curcio said. “In the end, the board considered the number of jobs involved — about 200 at the two anchor stores in the county — and the tax revenues generated. The majority felt it was the right thing to do.”
Boscov couldn’t be reached for comment.
Luzerne County, Pa., has promised to backstop the Atlantic County guarantee should it fail to get government approval. Boscov’s stores include units in both Egg Harbor, N.J., and Camp Hill, Pa. Malls in those locales are operated by Cedar Shopping Centers, which has supported Boscov’s with an additional $500,000 loan guarantee.
Based in Reading, Pa., Boscov’s filed for Chapter 11 bankruptcy protection in August. A family group led by Boscov and Lakin agreed to buy its assets in November, eclipsing the stalking horse bid made by Versa Capital Management Inc. in September.