Campeau Waiting for Creditors to OK Loan
Campeau Corp. was still trying Monday to win approval from creditors for a $250-million loan needed to pay overdue interest payments and to stock its department stores for Christmas.
The wealthy and secretive Reichmann family of Toronto has agreed to temporarily bail out fellow Canadian entrepreneur Robert Campeau, but other creditors, including Citibank, have not yet agreed to the terms of the loan, investment analysts said.
The analysts in both New York and Toronto say negotiations were continuing to try to persuade Citibank to approve the Reichmanns’ loan, which will be made through Olympia & York Developments Ltd, a Canadian development company that the Reichmann family owns.
Olympia & York already holds 25% of Campeau’s stock. If the new loan goes through, it will own 35% of Campeau, analysts said.
As part of the loan deal, Robert Campeau, chairman of Toronto-based Campeau Corp., was forced last Friday to cede control of his retailing empire to a committee of directors.
Committee’s First Task
The committee, which will be responsible for restructuring the cash-starved and heavily indebted company, will include representatives of the Reichmann family.
Other details of the committee’s make-up, including whether Robert Campeau will be part of it, have not yet been revealed.
Financial analysts say they believe that the committee’s first task will be to sell Campeau’s most marketable department store chains.
The company is the largest operator of department stores in North America, and its empire includes such well-known chains as Bloomingdale’s, Abraham & Straus, Lazarus, Jordan Marsh and Stern’s.
Campeau has already put its exclusive Bloomingdale’s stores on the block to help cut its huge $9.5-billion debt.
Analysts also speculate that the Reichmanns, who are now considered the world’s biggest office landlords, will want to concentrate on Campeau’s other business--real estate.
Campeau’s stock has been suspended on the Toronto Stock Exchange since last Wednesday. Campeau told the exchange early Monday that it hoped to be able to make an announcement on its financial restructuring later in the day.
As the uncertainty continued over whether the loan would go through, Campeau’s Federated Department Stores Inc. and Allied Stores Corp. divisions were running into problems with their suppliers.
Fashion suppliers Jones New York and Liz Claiborne have already suspended shipments to Campeau’s stores, according to newspaper reports.
On Friday, Heller Financial Inc., which finances accounts receivable for many manufacturers, told clients that until the situation is clarified, sales to Campeau’s stores would be at clients’ own risk.
Meanwhile, Campeau’s Allied division said on Friday that it was unable to make interest payments due on certain debts, but it still has a 30-day grace period before defaulting.
