Campeau Says It Will Go Bankrupt If New Financing Isn’t Found

Most of the vast retail empire of Campeau Corp., which includes the prestigious Bloomingdale’s department stores, will seek bankruptcy court protection early next year if the company doesn’t get financial help, the company confirmed Wednesday.

Carol Sanger, a Campeau spokeswoman, said the company’s Federated Department Stores and Allied Stores units could be forced to begin reorganizing as soon as late January under Chapter 11 of the U.S. Bankruptcy Code. To continue operating normally past that deadline, she said, Campeau will need to negotiate new terms with bank lenders, bond holders and suppliers.

Even if Campeau succeeds on that score, however, it will face another cash crunch in mid-March if it fails before then to sell its Bloomingdale’s chain and refinance its debt.

“The bottom line is, what the companies need is a cash infusion,” Sanger said.

Campeau also owns the Ralphs supermarkets chain. But analysts have said the Compton-based supermarket operator is sheltered from the parent company’s financial problems because it has a separate debt structure and its own credit line.

Toronto-based Campeau was rescued from the brink of bankruptcy in September with a $250-million loan from Olympia & York Developments. As part of the bailout, O&Y; took control of the company, pushing aside Canadian real estate magnate Robert Campeau.

But at that time, O&Y; also said it would not supply another $800 million in needed financing unless Campeau Corp. was successful in raising money through a financial overhaul including the sale of Bloomingdale’s.

Although industry observers have speculated recently that Campeau was again flirting with bankruptcy, the company’s disclosure was “the first time it’s been formally spelled out,” Sanger said.

Campeau has struggled under the burden of the heavy debt it took on to complete its acquisitions, particularly the $6.6-billion purchase of Federated in May, 1988. Both Federated and Allied also have been hurt by competitive pressures in the retailing industry, pressures that have prompted major chains to sharply mark down merchandise to attract Christmas shoppers.

On Tuesday, troubled Campeau reported a $105-million loss from its continuing operations in the third quarter, reflecting its severe financial difficulties.

Federated operates Bloomingdale’s, Abraham & Straus and Rich’s among other department stores. The Allied holdings, which were acquired by Campeau in December, 1986, include Jordan Marsh, Bon Marche and Stern’s.

Industry analysts said the Campeau units may be using the prospect of bankruptcy, initially disclosed in filings with the Securities and Exchange Commission, to win more breathing room from creditors.

“Some people expected that a bankruptcy filing would be an effective way of making sure that stores would be supplied with adequate inventory,” said retailing analyst Thomas H. Tashjian at Seidler Amdec Securities in Los Angeles.

Sanger, however, denied such speculation. The company’s SEC filing, she said, “is not a marketing document.” She said it accurately reflects Campeau’s financial status.