Campeau Tries to Calm Fears About Its Long-Term Health

Campeau Corp., struggling under a multibillion-dollar debt, says it hopes to reassure lenders who finance shipments to its department stores that the company’s long-term fiscal health is sound.

“We respect the obligations of those with whom we do business to make financial decisions that they deem to be in their own best interests. We remain hopeful that we will be able to resolve this situation favorably, well in advance of spring merchandise deliveries,” Carol Sanger, Campeau’s vice president of corporate communications in Cincinnati.

Federated Department Stores Inc. and Allied Stores Corp., owned by the Toronto-based Campeau, revealed last week that they are trying to restructure $7 billion in debt and may need to seek U.S. Bankruptcy Court protection from creditors while reorganizing their finances. Campeau Corp. assumed more than $8 billion in debt when it bought Cincinnati-based Federated in May, 1988.

Officials of CIT Group-Factoring, the New York retail lending company and subsidiary of Manufacturers Hanover Corp., expressed concern about the retailers’ statements that they could run out of cash by the end of January, endangering payments due suppliers in February and beyond.

Last week, Heller Financial, a major lender in Chicago, cut off credit on shipments.