Eckerd Corp. in New Bid for Revco

Drugstore chain Jack Eckerd Corp. is trying once again to acquire its bankrupt brethren, Revco D.S., with an enhanced bid that would create a new, publicly held firm.

Under the offer, Eckerd will issue nearly $970 million in debt securities to buy Revco. Privately held Eckerd also plans to issue about 200 million shares of stock and set aside the proceeds to retire some of the debt.

Proceeds from the stock sale also will be used to help Revco’s financial restructuring, according to the filing, which was made through federal bankruptcy court in Akron, Ohio.

“Our plan offers a unique and equitable opportunity to bring Revco out of bankruptcy,” Stewart Turley, Eckerd chairman, said in a press release. “We believe this plan provides superior value for Revco’s creditors.”

Revco, based in Twinsburg, Ohio, said it is reviewing the plan. The company noted that reorganization plans have been filed by Revco and its parent and by four creditor groups.

“With the filing of this third plan, our creditors now have on the table a clear set of choices for the reorganization of Revco,” Chairman Boake A. Sells said. “It started with the filing of the company’s plan in June. With the Eckerd plan and creditor plans now also available, it is time for a decision to be made so Revco can leave bankruptcy as soon as possible.”

This is the third time Eckerd has expressed an interest in Revco. The earlier efforts were rejected as insufficient.

Revco, which has more than 1,100 stores and $2.5 billion in annual revenue, filed for bankruptcy protection in July, 1988, because of problems making interest payments on $1.3 billion in debt.

It took on the debt when it went private in a leveraged buyout in 1986--the same year Eckerd did. But although Eckerd survived the buyout amid the takeover-crazed 1980s, Revco was one of the first leveraged buyouts to go sour.

Eckerd made an unsolicited bid for Revco in May that was rejected by Revco’s board, which said the offer was “insufficient in value for further consideration.” Revco said then that it preferred a reorganization to the sale of the company.

Eckerd said the latest plan “provides significantly improved values” over its previous offers.

Eckerd operates 1,676 drugstores in 13 states, as well as optical stores and express photo labs. The chain is strongest in the Sun Belt, particularly Florida and Texas.

The 1,150 Revco stores are concentrated in Southeast and mid-Atlantic states.