Creditors OK Bailout for CHH Stores : * Retail: The $280-million deal means an investment firm will begin plans to take control of the Broadway’s parent.

The Chicago-based Zell/Chilmark Fund is set to take over Carter Hawley Hale Stores, after creditors overwhelmingly accepted the fund’s $280-million bailout offer by Thursday’s deadline, the fund’s principals said.

More than 75% of the troubled retailer’s creditors have accepted Zell/Chilmark’s 47-cent-on-the-dollar debt purchase, setting the stage for the fund’s eventual takeover of the company and its emergence from bankruptcy within the next six months.

Principals of the Zell/Chilmark Fund said that when the tender offer deadline came Thursday at 2 p.m. PDT, holders of more than $420 million of the $539 million worth of outstanding Carter Hawley debts and junk bonds had accepted the offer.

The fund, which has agreed to pay as much as $280 million for all of Carter Hawley’s debt and junk bonds, had said that its offer had to be accepted by a minimum of 70% of the creditors for it to proceed as scheduled with its takeover plans.

Now that Zell/Chilmark is Carter Hawley’s largest single creditor, it will begin negotiating with the department store chain to convert its debt holdings into a controlling equity stake. At the same time, the investors will work with Carter Hawley directors and executives to develop a reorganization plan that will allow the retailer to emerge from bankruptcy.

Neither Samuel Zell nor David Schulte, the two principals of the Zell/Chilmark Fund, would say Thursday how large a stake in Carter Hawley they will demand in exchange for their share of the company’s outstanding debts. But two months ago, the duo indicated that they might get as much as a 90% ownership position in the company.

“I don’t know what we will end up with,” Zell said in an interview Thursday, “but it will be significantly more than a majority of the company.”

Zell and Schulte said their first priority now is to develop a business reorganization plan with Carter Hawley executives and submit it for approval by the federal court judge overseeing the retailer’s bankruptcy proceedings within the next four to six months.

The plan will detail how the claims of suppliers, landlords and other business associates affected by the bankruptcy--but not covered by the Zell/Chilmark offer--will be treated, as well as spell out how Carter Hawley will proceed with its retail operations once out of the control and protection of the bankruptcy court.

“We feel terrific about this,” said Philip M. Hawley, chairman and chief executive of Carter Hawley and currently the company’s largest single shareholder. “This is the most constructive thing that’s happened to this company in a long time.”

Hawley said he is particularly excited about the investment fund’s promise to loan the retailer a minimum of $50 million to begin a long-overdue modernization of the company’s stores, which have suffered in recent years as shoppers have abandoned traditional department stores for livelier and better-stocked speciality stores.

Hawley said the modernization will begin after the Christmas shopping season and will likely involve the closing of six to eight poorly performing stores within its 89-store Broadway, Emporium, Weinstock’s and Broadway Southwest chains. Those closings, he said, would be announced within the next 90 days. The company has already closed several stores during the past several months.