KMART IN $26M BOND BATTLE WITH BORDERS AND OFFICEMAX
NEW YORK — Kmart Corp. is bickering with two of its former subsidiaries, Borders Group and OfficeMax, over bonds.
Borders, a bookstore chain, and OfficeMax disagree with Kmart’s contention that they are liable for $26 million in bonds that could be put to Kmart for payment if the discount chain’s rating is cut below investment grade.
Borders said it notified Kmart that it does not believe it has any obligation to reimburse Kmart for any portion of that debt. Kmart’s contention on the potential of its subsidiaries’ liability was noted in Kmart’s third-quarter filing with the Securities and Exchange Commission.
The bonds are part of some $680 million in outstanding bonds that could become payable if either Moody’s or Standard & Poor’s cut their ratings of Kmart below investment grade. Currently, Kmart’s ratings are investment grade, but they are under review for downgrades by both agencies. — Fairchild News Service