After Delays, Campeau Has Bailout Loan : Reichmann Brothers Get Control of Firm's Retailing Units

By MARTHA GROVES

Sept. 20, 1989 12 AM PT

Times Staff Writer

After more than a week of tense negotiations, Campeau Corp. said Tuesday that it finally has secured a $250-million loan that will bail out its cash-starved U.S. retailing companies.

In exchange for the infusion, the wealthy Reichmann brothers of Canada and their Olympia & York Developments, as expected, gain control of the retailing units and will oversee Campeau’s previously announced overhaul, including the sale of the glitzy Bloomingdale’s chain.

The Reichmanns supplant Robert Campeau, the bodacious Toronto entrepreneur whose hard-won acquisitions of Federated Department Stores and Allied Stores put his company deep in debt.

Even though the company made much of the notion that its immediate liquidity crisis has passed, others said they would wait and see.

Heller Financial Inc., a Chicago-based factoring firm that acts as a financial middleman between clothing makers and retailers, said it has not yet resumed shipments to the Federated and Allied chains. It halted shipments to the chains last week when Campeau’s troubles were laid bare in financial filings with the Securities and Exchange Commission.

Will Get New Chief

The firm has advised manufacturing clients that future sales to Campeau’s chains would be “at their sole credit risk” but that Heller would closely monitor any changes in Campeau’s status. That situation still applies, spokesman John Brooklier said Tuesday.

To restore Campeau Corp. to health, a four-member special directors committee was appointed to develop and implement plans. A new chief executive and a new chief financial officer will be named later, Campeau Corp. said.

Although the changes were viewed as a setback to Robert Campeau, he sought in a prepared statement to put a good face on the arrangement.

“At my request, Olympia & York has agreed to substantially increase its investment in Campeau and to be primarily responsible for the refinancing and restructuring,” Campeau said. “The significant experience and expertise of the Olympia & York organization will greatly assist in the endeavor.”

Although Campeau retains his chairman’s title, a new, pared-down board of directors eliminates many of his relatives and longtime associates. Among those are his wife, Ilse, and a son, Daniel.

The board will now consist of 10 members, half its previous size. In addition to Campeau, 66, they include Ronald W. Tysoe, the 36-year-old president and chief operating officer of Campeau Corp., and Byron E. Allumbaugh, chairman of Ralphs Grocery in Compton, of which Campeau owns a majority of the stock. Three other directors, including Albert Reichmann, were named by Olympia & York, and the remaining four are from outside.

Stymied by Creditors

On the special restructuring committee will be Lionel G. Dodd, chief operating officer of Olympia & York, who as chairman of the panel could break a tie with an extra vote; Robert J. Butler, retired president of the Eaton’s department store chain of Toronto; G. William Miller, former U.S. Treasury secretary and now head of a merchant banking firm in Washington, and Tysoe.

For days, Campeau Corp. had indicated that it hoped at any time to announce the loan arrangement, but observers said the company was repeatedly stymied by demands from cautious lenders who wanted to protect themselves. The agreement was not fully cleared until 6:30 California time Tuesday morning.

Soon after the loan agreement was announced, Allied Stores received $50 million and immediately covered an interest payment that it had been unable to make last Friday.

Under the deal, Olympia & York will receive warrants entitling it to buy Campeau shares. If it buys all 16 million additional shares, its stake in Campeau would rise to about 38.4% from the 24.5% held now. Meanwhile, Robert Campeau’s stake would drop to 43.2% from about 54%.

The imminent settling of the cash crisis was cause for celebration for at least one interested party Monday night. Bloomingdale’s Chairman Marvin S. Traub, who has said he would like to buy the 17-store chain, and a 15-person entourage popped open champagne bottles at Bouley, a restaurant in downtown Manhattan.

CAMPEAU’S U.S. HOLDINGS Here is a list of U.S. properties Campeau Corp. owns or holds an interest in, according to the company’s 1989 annual report:

Federated Department Stores Inc.

Abraham & Straus, 15 stores in New Jersey, New York.

Bloomingdale’s, 17 stores in Connecticut, Florida, Massachusetts, Maryland, New Jersey, New York, Pennsylvania, Texas, Virginia.

Burdines, 30 in Florida.

Lazarus, 43 in Indiana, Kentucky, Michigan, Ohio, West Virginia.

Rich’s-Goldsmith’s, 26 in Alabama, Georgia, South Carolina, Tennessee.

Allied Stores Corp.

Jordan Marsh, 26 stores in Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island.

Maas Bros.-Jordan Marsh, 28 in Florida, Georgia.

Stern’s, 24 in New Jersey, New York, Pennsylvania.

The Bon, 39 in Idaho, Montana, Oregon, Utah, Washington, Wyoming.