TJX SAID INTERESTED IN FILENE’S BASEMENT

Byline: Vicki M. Young

NEW YORK — The TJX Cos. Inc.’s ongoing search for real estate opportunities has reportedly directed its sights to Filene’s Basement.
According to financial sources, the off-pricer is in the midst of conducting due diligence on the Filene’s Basement operation. The Framingham, Mass.-based retailer first surfaced as a potential acquirer shortly before Thanksgiving.
Richard Jaffe, retail analyst at UBS Warburg, told WWD that any interest by TJX in Filene’s Basement is based solely on the opportunity to acquire strategic retail sites that are either “irreplaceable or substantially below market rent.” Filene’s Basement operates 20 units, including its Boston flagship. On Monday, Jaffe downgraded shares of TJX to “hold” because of the likelihood of a sales shortfall in November as warm weather hurt volume of sweaters, scarves and gloves.
Sharry Lang, vice president for investor relations at TJX, declined comment. Other executives at the firm were unavailable for comment due to a board meeting.
As reported in August, Value City entered into a non-binding letter of intent with Schottenstein Stores Corp. for VC to sell Filene’s Basement and two other operations to SSC for an aggregate purchase price of $275 million, comprised of $200 million in cash and the assumption of the $75 million Value City senior subordinated convertible loan held by SSC. As part of the deal, SSC immediately increased the line of credit under the Value City subordinated credit facility to $100 million from $50 million and allowed the financially challenged discounter to immediately draw $50 million from the facility.
Under the terms of the letter of intent, Value City retained the right to negotiate with certain other entities that had expressed an interest in purchasing one or more of the businesses up for sale. Although the Value City-SSC deal was expected to have closed in mid-October, a Securities and Exchange Commission filing from Oct. 24 said that the two are still negotiating the terms of the “definitive agreement.”
Executives at SSC, which owns 54 percent of Value City, could not be reached for comment. Value City also declined comment, referring calls to remarks made at the discounter’s conference call on Nov. 28 discussing third-quarter earnings results.
On that call, George Kolber, vice chairman and chief executive officer, asked analysts to refrain from queries on the status of the SSC deal. Kolber said the retailer was hopeful it will make a “definitive announcement shortly,” but that it was not permitted to comment due to advice from its attorneys.

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