P.M. BRIEFING : Beleaguered Campeau Defaults on $5-Million Interest Payment

Campeau Corp., its U.S. store subsidiaries already in bankruptcy protection, defaulted on interest payments for major loans today, throwing doubt on the survival of the parent company.

Campeau’s U.S. department stores include Bloomingdale’s, Abraham & Straus, Jordan Marsh and six other well-known chains.

Campeau said it will not make $5.2 million of interest payments on loans totaling $705 million due to Olympia & York Developments Ltd. and to the Edward J. DeBartolo Corp.

Toronto-based Campeau said in a statement that it decided not to make the payments “as a result of failure to reach agreement with the Edward J. DeBartolo Corp. upon a period of time for any further deferral on the payment under its loan.”

Olympia & York--controlled by Toronto’s Reichmann family--and shopping center developer DeBartolo agreed previously they will not seize collateral without first giving nine days’ notice.

Campeau said it expects to continue discussions with the two lenders regarding the development of a long-term business plan for the operations of the corporation.

Cash flow to the parent company was sharply reduced after its U.S. retail units--Federated Department Stores Inc. and Allied Stores Corp.--filed for Chapter 11 bankruptcy protection in January.