Southland Corp., parent of the 7-Eleven convenience store chain, emerged from Chapter 11 bankruptcy Tuesday after two Japanese companies formally pumped $430 million in cash into the retailer by buying 70% of its stock.
Southland's Chapter 11 reorganization plan, approved by a bankruptcy judge Feb. 21, proposed the $430-million purchase of Southland by Ito Yokado Co. and Seven-Eleven Japan Co.
Clark Matthews, Southland's chief financial officer, became the firm's chief executive with the consummation of the deal, which transferred control of the company from the Dallas family that founded it in 1927.
Southland badly need the cash infusion from the Japanese companies to extricate itself from the debt burden of its 1987 leveraged buyout. The company raced through bankruptcy court to meet a March 15 deadline the Japanese had set for the purchase to be completed.
Matthews said Southland will be stronger as a result of the cash infusion. "Equally important is the fact that (Ito Yokado and Seven-Eleven Japan) know both the convenience retailing business and 7-Eleven very well," he said in a statement.
The purchase gives the Japanese companies a 70% stake in Southland. The reorganization plan also provided a 25% stake in the company for bondholders and other creditors.
Southland's stockholders, primarily the founding Thompson family, will have a 5% stake. Some bondholders have an option to increase their stake in Southland at the expense of the Thompsons.
The Dallas company owns 6,600 7-Eleven stores in the United States and Canada and licenses another 6,400 stores in 22 countries. About 4,200 of the overseas stores are operated by the Japanese buyers.
Southland spokeswoman Cecilia Norwood said customers will see no difference in 7-Eleven stores. "We expect the company to continue operating as it has in the past," she said.
The company filed for bankruptcy protection in late October, saying it was burdened by debt from the $5-billion leveraged buyout the Thompsons used to take the company private in 1987.
The company filed a "prepackaged" bankruptcy plan, one that has already been approved by creditors, to speed the reorganization process.
The typical Chapter 11 approach, in which a company files and then later presents a judge with a reorganization plan that must be approved by creditors, can take months and even years.