MACY EXPECTED TO FILE PLAN TODAY BUT ASKS EXTENSION FOR DISCLOSURE
NEW YORK — Federated Department Stores and R.H. Macy & Co. are expected to file their $4.1 billion reorganization plan today in bankruptcy court, and seek an extension for filing the disclosure statement.
The merger agreement was announced on July 14, and since then there has been wide speculation that the disclosure document would be filed well after the plan.
The deadline set by the court for filing both the plan and the disclosure statement is Monday, but Federated executives said Thursday that the company will ask Bankruptcy Judge Burton R. Lifland for an additional 30 days in which to file the disclosure statement.
Under bankruptcy law, the plan and the statement, which is the road map for achieving the plan, must be filed simultaneously, unless there are extenuating circumstances.
Federated and Macy’s are expected to argue, however, that it took them and creditors months to reach a merger agreement, giving them little time to meet Monday’s deadline for filing the plan and the statement.
The statement will provide details of Federated’s merger strategy and a vision of the future for the combined $13.5 billion operation. It should pack in financial information and specify consolidation and merchandising strategies pertinent to Federated and Macy employees and SA.
The retailers are sticking to their original projection of bringing Macy’s out of bankruptcy in January. The disclosure statement, said Lester Lazarus, a veteran bankruptcy attorney in New York, gives creditors “all the information required to make an intelligent decision about accepting a plan and assure the court that the company has a good chance to succeed and won’t be back in Chapter 11 within a short period.” In this case, it could be hundreds of pages long, Lazarus said, considering the size of the merger.
A key element will be a five-year plan with sales and earnings projections of the combined company through 1999. The five-year plan will show anticipated cash flows needed to meet interest and principal payments on outstanding debt and debt issued under the plan.
This information will be developed right after the reorganization plan is filed. It’s the last phase of Macy’s 2 1/2-year-old Chapter 11 case. After creditors see the disclosure statement, they vote on the plan.