BROADWAY AGREES TO MERGER WITH FEDERATED
CINCINNATI, Oh and LOS ANGELES. Ca--Aug. 14, 1995--
Federated Department Stores, Inc. and Broadway
Stores, Inc. jointly announced today that the boards of directors of both companies
have approved a definitive agreement providing for a stock-for-stock
merger under which Broadway Stores will become a subsidiary of
Federated. The merger is expected to take place by mid-to-late
Los Angeles-based Broadway Stores, Inc. is a leading retailer in
the western U.S., with annual sales of more than $2 billion.
Broadway currently operates 83 department stores under the names of
The Broadway, Emporium and Weinstocks; 71 of the stores operate in
California, with the remainder in Arizona, Colorado, Nevada and New
Mexico.
"There are few deals too good to pass up because of what they
can mean to a company strategically over the longer term," Allen
Questrom, Federated's chairman and chief executive officer, said in
making today's announcement. "Because this merger will enable us to
broaden our base of store operations in this important area of the
country, we think this is one of those deals for Federated."
While the company has not yet finalized its plans, Federated
anticipates retaining and operating a significant number of the
stores acquired in the merger with Broadway, and divesting the
remainder over the next year or so. Most of the retained stores
will be converted to Macy's/Bullock's or, in the case of a few of
the acquired stores, to Bloomingdale's, marking that prestigious
chain's first entry into California.
An operational conversion of the retained Broadway stores into
Macy's/Bullock's or Bloomingdale's is expected to be initiated early
in 1996; in the interim, Broadway, Emporium and Weinstocks stores
will continue operating as they are now until after the first of the
year.
Federated said it is too early in the process to provide any
additional information on specific store sale, retention or
conversion plans; those decisions and subsequent announcements will
not be forthcoming until after the merger is completed this fall.
"We expect that most of Broadway's stores that we retain will be
converted to Macy's/Bullock's after the merger, and a few will
become Bloomingdale's," Questrom said. "We are delighted at the
opportunity to acquire these fine stores, because it represents a
singularly unique opportunity to significantly expand Federated's
presence on the West Coast, and to enhance the company's competitive
position for the benefit of consumers in those communities."
In the merger, each of Broadway's approximately 46.9 million
outstanding shares of common stock will be converted into 0.27
shares of Federated common stock; accordingly, Federated will issue
approximately 12.7 million shares of new Federated common stock in
the merger transaction.
In connection with the merger, Federated also agreed to acquire
Broadway's existing mortgage loan of approximately $422 million from
Prudential Insurance Company of America, in exchange for additional
Federated common stock to be valued at $200.0 million at the time of
acquisition, plus approximately $222 million of new indebtedness.
In addition, as a result of the transaction, Broadway's working
capital lender has undertaken to liberalize the financial covenants
on that facility, and to increase the size of the facility.
"With Federated as an industry partner, we expect that we will
be able to reassure our trade resources and our people immediately
and dramatically, and we expect an immediate return to a normal
trade situation," said David L. Dworkin, president and chief
executive officer of Broadway.
Zell/Chilmark L.P., which presently owns approximately 54
percent of Broadway's outstanding common stock, has agreed to vote
those shares in favor of the merger and has granted Federated an
option to buy those shares at the merger exchange ratio. A meeting
of Broadway shareholders for the purpose of voting on the merger is
expected to take place in October.
In addition to customary conditions, the merger is conditioned
on both parties' receipt of certain bank consents and waivers.
"Broadway always has had an amazing collection of assets. With
this transaction, the prospect for superior utilization of those
assets has increased," said Sam Zell, general partner of
Zell/Chilmark. "This deal is good for The Broadway, its employees
and vendors. Shareholders will have a continuing interest in a well
managed retail company, with lots of growth potential and benefits
of enhanced economies of scale."
James M. Zimmerman, Federated's president and chief operating
officer, noted that in recent years, Federated has "acquired a
tremendous amount of experience in merging divisional operations and
converting store nameplates. Because of this, we believe we will be
able to effect a smooth transition of Broadway Stores into
Federated, and to effectively convert these stores into
Macy's/Bullock's or Bloomingdale's with a minimum of disruption to
our existing business."
Zimmerman said Federated currently expects to invest
approximately $525 million in capital for conversions and major
remodels of stores acquired and retained from the Broadway merger
over the period from 1996-1999. Sales generated by retained stores
are expected to add approximately $1.4 billion annually to
Federated's annual sales totals in their first full year, which
would be beginning in Fiscal 1997. These numbers are subject to
change as plans are finalized.
As a result of the merger, Federated will take one-time charges
against earnings in the current and possibly the next fiscal year;
the actual amount of these charges cannot yet be determined.
Federated, with corporate offices in Cincinnati and New York, is
one of the nation's leading retailers, with annual sales before the
merger of more than $14 billion. Federated currently operates 354
department stores and more than 100 specialty and clearance stores
in 35 states under the names of Bloomingdale's, The Bon Marche,
Bullock's, Burdines, Goldsmith's, Jordan Marsh, Lazarus, Macy's,
Rich's and Stern's, as well as Aeropostale, Charter Club and Macy's
Close Out.
CONTACT: Federated Department Stores, Inc., Cincinnati
Media - Carol Sanger, 513/579-7764
Investor - Susan Robinson, 513/579-7780
or
Broadway Stores, Inc., Los Angeles
Bill Ihle, 213/227-3884
AMERICA WEST COMPLETES TRANSACTION TO REPURCHASE AND EXCHANGE SENIOR
UNSECURED NOTES
PHOENIX, Az--Aug. 14, 1995--Reflecting its significantly
improved operating performance, America West
Airlines (NYSE: AWA)
today announced that it had completed a transaction to prepay $48
million of its $123 million of 11.25% Senior Unsecured Notes due
Sept. 1, 2001, and to exchange the remaining $75 million for new
notes with a lower coupon and longer maturity. The coupon on the
new notes is 10.75% with a maturity of Sept. 1, 2005.
W.A. Franke, chairman and chief executive officer, said, "Less
than a year after emerging from Chapter 11, the company is
performing much better than predicted. We recently announced record
earnings for the second quarter 1995 - our 10th consecutive
quarterly profit. Our total cash balance at the end of the quarter
exceeded $300 million, of which $279 million was unrestricted. This
combination of events provides us with an opportunity to improve our
balance sheet by prepaying significant debt with excess available
cash and exchanging the remainder of the Notes for new notes at more
favorable terms."
The 11.25% Senior Unsecured Notes were privately placed with
certain institutional investors as a part of the company's Chapter
11 reorganization plan in August 1994.
"This transaction benefits the company in several ways," said
Franke. "Total debt has been reduced by approximately 10% and our
average borrowing costs are lower. Net interest expense is expected
to decline by approximately $3 million per year. Furthermore, we
have increased our financial flexibility by extending maturity from
2001 to 2005 and relaxing covenants on certain restricted payments
such as dividends and stock repurchases.
/CONTACT: Michael Mitchell, manager of Corporate Communications of
America West, 602-693-5732/
All For A Dollar announces second quarter and six months results
SPRINGFIELD, Mass.--Aug. 15, 1995--All For A
Dollar Inc. (the "company"), today announced sales and earnings for the second
quarter and six months ended July 1, 1995.
As previously announced, sales for the 1995 second quarter
decreased 14.4 percent to $10.3 million from $12.0 million, and
sales for the six month period decreased 23.8 percent to $19.7
million from $25.9 million, compared to the corresponding 1994
periods. The reduction in sales is solely the result of operating
54 fewer stores in 1995.
Sales in stores which were open more than 24 months (comparative
store sales) increased 15.2 percent for the 1995 second quarter from
the corresponding period in 1994. For the six months ended July 1,
1995, the comparative increase was 5.1 percent. The favorable trend
in comparative sales continued in July.
Loss before reorganization items for the second quarter was
$764,000, compared to a loss of $2.6 million in the corresponding
period in 1994. Net income for the quarter was $5.6 million, or
$.81 per share, primarily as a result of recording a $6.4 million
extraordinary gain on forgiveness of debt relating to the June 30,
1995 confirmation of the company's Plan of Reorganization. Net loss
for the corresponding period in 1994 was $8.6 million, or $1.24 per
share, primarily as a result of recording $6.0 million in
reorganization items relating the company's filing voluntary
petitions for reorganization under Chapter 11 in June 1994.
Loss before reorganization items for the 1995 six months was
$1.9 million, compared to a loss of $4.3 million in the
corresponding period in 1994. Net income for the six months was
$4.5 million, or $.65 per share, compared to a net loss of $10
million, or $1.44 per share in the corresponding 1994 period. The
variance in net profit performance is related to the company's
bankruptcy proceedings.
Roger Slate, president and chief executive officer of All For A
Dollar, stated that "we are very pleased with the improvements in
operating results and the company's successful emergence from
Chapter 11 bankruptcy."
All For A Dollar presently operates 110 retail close-out variety
stores in nine northeastern states, offering high quality and brand
name merchandise, predominantly at the single price point of $1.
The company plans to open an additional store this month in
Cambridge, Mass.
CONTACT: All For A Dollar
Donald A. Molta, 413/733-1203