PISCATAWAY, N.J. -- Sept. 9, 1996 -- Enzon Inc.
(NASDAQ\NMS:ENZN) announced today a net loss of $5,175,000 or $0.20
per share for the year ended June 30, 1996 compared to a net loss of
$6,291,000 or $0.26 per share in fiscal year 1995.
The decrease in the net loss was primarily due to a 15%
reduction in total expenses and an increase in other income which
was offset in part by a reduction in contract revenue.
For the three months ended June 30, 1996 the company reported
a net loss of $985,000 or $0.04 per share compared to a net loss of
$492,000 or $0.02 per share for the same period last year. The
increase in the net loss for the quarter ended June 30, 1996 was
principally due to a decrease in contract revenues related to a one
time $2,000,000 payment received in 1995 from the company's
collaborative partner, Schering Corp., related to the amendment of
the company's license agreement for PEG-INTRON A. During June 1995,
the company amended its agreement with Schering Corp. and agreed to
transfer know-how and manufacturing rights for PEG-INTRON A and sell
847,000 shares of common stock to Schering for $5,000,000 in
payments.
Total revenues, which include sales, royalties and contract
revenues for the year ended June 30, 1996 decreased by 20% to
$12,681,000 as compared to $15,826,000 reported last year. Revenues
for the year decreased due to the elimination of clinical supply
shipments of PEG-INTRON A to Schering Corp., as well as a decrease
in contract revenues as a result of the $2,000,000 payment recorded
during the previous year related to the amendment of the company's
license agreement with Schering. A comparable payment was not
recorded in the current year. Revenues from the company's two FDA
approved products, ADAGEN and ONCASPAR, continued to increase.
Research and Development expenses for the year ended June 30,
1996 decreased by $1,960,000 or 16% to $10,124,000 as compared to
$12,084,000 for the year ended June 30, 1995. The decrease was
primarily due to a reduction in personnel costs, particularly in the
clinical and research administration areas, as the company's lead
product, PEG-hemoglobin, moved from research to clinical trials.
As part of its cost containment program, the company is now
utilizing a contract research organization (CRO) for the clinical
development of PEG-hemoglobin, which is being developed as an
enhancement to radiation treatment for patients diagnosed with
cancerous hypoxic tumors. The company now believes its Phase Ib
study for this product will conclude during the first quarter of
1997.
Selling, General and Administrative expenses for the year
ended June 30, 1996 decreased by 13% to $6,010,000 as compared to
$6,916,000 for the year ended June 30, 1995. The decrease was
primarily due to staff reductions made over the last twelve months,
as well as other cost containment measures taken by the company.
Other income for the year ended June 30, 1996 increased to
$1,823,000 as compared to $994,000 in 1995. The increase was due to
the one time recognition of $1,313,000 of non-cash other income
during the year ended June 30, 1996 related to the unused portion of
an advance received under the company's agreement with Sanofi
Winthrop Inc. ("Sanofi") for the development of PEG-SOD. This
advance was previously recorded as a current liability.
The company had cash on hand as of June 30, 1996 of
$12,666,000 as compared to $12,761,000 for the previous quarter
ended March 31, 1996. The company believes its current cash levels
are sufficient to meet anticipated cash requirements, based on
current spending levels, for approximately two years. The previous
statement is forward-looking in nature. Actual results could differ
materially based on various factors, including, but not limited to,
the company's ability to maintain current sales levels of its
products and current levels of expenses, or the occurrence of any of
a number of unforeseeable contingencies beyond the company's
control.
"I am proud to report that the company's adjusted monthly burn
rate for the quarter ended June 30, 1996 was approximately $350,000,
which is the lowest burn in five years. This monthly burn has been
adjusted to not include the cash received from a one time gain
related to the exercise of Neoprobe warrants during the fourth
quarter," said Peter G. Tombros, president and chief executive
officer. "Our cost containment efforts are on-going and we continue
to utilize outside sources, such as a CRO for clinical trials, as a
means of keeping costs down."
Enzon is a biopharmaceutical company developing advanced
therapeutics for life-threatening diseases through the application
of its proprietary technologies. The company's research activities
are focused primarily in the area of oncology, including the
development of a hemoglobin-based oxygen carrier. The company also
pursues commercialization of its technologies through strategic
alliances, including arrangements with Rhone-Poulenc Rorer
Pharmaceuticals Inc., Schering Corp., Eli Lilly, Bristol-Myers
Squibb, Inc. and Baxter Health Care. Enzon is headquartered in
Piscataway.
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended June 30, 1996 and 1995
(unaudited)
Three Months Ended
June 30, 1996 June 30,1995
__________________ _________________
Revenues
Sales $ 2,421,314 $ 2,952,835
Contract revenue 1,268,850 2,000,000
___________ __________
Total revenues 3,690,164 4,952,835
___________ __________
Costs and expenses
Cost of sales 452,779 706,575
Research and development
expenses 2,572,450 3,228,260
Selling, general and
administrative expenses 1,798,261 1,559,635
__________ __________
Total costs and expenses 4,823,490 5,494,470
__________ __________
Operating loss (1,133,326) (541,635)
Other income (expense)
Interest and dividend income 149,517 70,034
Interest expense (133) (195)
Other (715) (20,440)
__________ __________
148,669 49,399
__________ ___________
Net loss ($984,657) ($492,236)
__________ ___________
Net loss per
common share ($0.04) ($0.02)
__________ ___________
Weighted average number
of common shares
outstanding
during the period 27,705,497 25,481,385
ENZON INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Years Ended June 30, 1996 and 1995
Years Ended
June 30, 1996 June 30, 1995
__________________ __________________
Revenues
Sales $10,501,985 $11,024,432
Contract revenue 2,179,296 4,802,005
___________ ___________
Total revenues 12,681,281 15,826,437
___________ ___________
Costs and expenses
Cost of sales 3,545,341 2,918,737
Research and development
expenses 10,123,525 12,083,960
Selling, general and
administrative expenses 6,010,639 6,916,393
Restructuring expense - 1,192,971
__________ ___________
Total costs and expenses 19,679,505 23,112,061
__________ ___________
Operating loss (6,998,224) (7,285,624)
Other income (expense)
Interest and dividend income 449,855 236,848
Interest expense (12,886) (3,988)
Other 1,385,976 761,273
__________ ____________
1,822,945 994,133
__________ ____________
Net loss ($5,175,279)
($6,291,491)
__________ ____________
Net loss per
common share ($0.20) ($0.26)
__________ ____________
Weighted average number
of common shares
outstanding
during the period 26,823,142 25,184,718
CAROL STREAM, IL -- Sept. 9, 1996 -- Ben Franklin Retail
Stores, Inc. announced today the appointment of Steven J. Zabel as
Senior Vice President and Chief Financial Officer, effective
immediately. In addition to his duties as Chief Financial Officer,
Mr. Zabel will have responsibility for the Company's information
systems. Mr. Zabel was most recently Vice President and Chief
Financial Officer, the Warehouse Club. Inc.
Headquartered in Carol Stream, Illinois, Ben Franklin is a
national broadline wholesaler of variety and craft merchandise and
franchiser and operator of variety and craft stores. The Company
filed for protection under Chapter 11 of the United States
Bankruptcy Code on July 26, 1996. Two of the Company's
subsidiaries, Auto Artistry and Ben Franklin Insurance Agency, were
excluded from the filing.
CONTACT: Richard Wool of Hill and Knowlton, Inc, 212-885-0523
CAROL STREAM, IL -- Sept. 9, 1996 -- Ben Franklin Retail
Stores, Inc. announced today that the United States Bankruptcy Court
for the Northern District of Illinois has approved, with the consent
of its secured lenders, the use of up to $59 million in cash
collateral under Section 361 of the Bankruptcy Code in accordance
with the Company's business plan through December 31, 1996. The
Company said that it intends to use the cash collateral for
inventory purchases and other general operating expenses. Use of
the cash collateral will be monitored by its secured lenders in
accordance with operating covenants that pertain to collection of
receivables, sales of non-core assets, total expenditures, inventory
purchases and outstanding debt balances.
Commenting on the Court's decision, Robert A. Kendig, President
and Chief Operating Officer, said, "This is a significant step
forward for us. The availability of these funds gives us the
ability to distribute product while we continue to develop our
business plan that will permit us to emerge from bankruptcy as a
smaller, yet more vigorous, wholesaling company. This business will
focus on selling craft and general merchandise to our current
franchise and wholesale customer base."
Ben Franklin Retail Stores, Inc. filed for protection under
Chapter 11 of the United States Bankruptcy Code on July 26, 1996.
Two of the Company's subsidiaries, Auto Artistry and Ben Franklin
Insurance Agency, were excluded from the filing.
Headquartered in Carol Stream, Illinois, Ben Franklin is a
national broadline wholesaler of variety and craft merchandise and
franchisor and operator of variety and crafts stores.
CONTACT: Richard Wool of Hill and Knowlton, Inc., 212-885-0523
WORCESTER, MA -- Sept. 9, 1996 -- Cambridge Biotech
Corporation (NASD-OTC-Bulletin-Board: CBCXQ) reported today that it
received $3.25 million from Abbott Laboratories (NYSE: ABT) under an
agreement granting Abbott a fully paid-up non-exclusive sublicense
for the use in the diagnostic field of certain HIV-related
technology. The technology covered in the agreement is licensed
exclusively to CBC by Harvard University. Under a separate
agreement, Harvard will receive an additional payment from Abbott.
The agreements resolve a dispute between the parties concerning
whether certain products or services sold by Abbott were covered by
a sublicense granted to Abbott by CBC in 1988.
Cambridge Biotech Corporation, which filed for protection under
Chapter 11 of the United States Bankruptcy Code on July 7, 1994, is
a therapeutics and diagnostics company focusing on infectious
diseases and cancer. The Company is developing and commercializing
products which stimulate the immune system for use in treating
certain infectious diseases and specific cancers. The therapeutic
products include the Stimulon(TM) family of adjuvants, the most
advanced of which, QS-21, is in clinical development through
corporate and academic partners, and proprietary vaccines. The
proprietary vaccines include a feline leukemia vaccine currently on
the market, and in development human vaccines for pneumococcal
infections, malaria and tick-borne diseases, and animal vaccines for
bovine mastitis and canine Lyme disease. Cambridge Biotech's
diagnostic business (to be sold to bioMerieux Vitek under the
Chapter 11 plan) is primarily focused on retroviral and Lyme
diseases.
Statements in this release which relate to plans and objectives
of management for future operations or which otherwise relate to
future performance are forward looking statements. Actual results
may differ from those projected as a result of the Company's success
in emerging from bankruptcy, product demand, pricing, market
acceptance, the effect of economic conditions, intellectual
property, competitive products, risks in product and technology
development, and other risks identified in the Company's Securities
and Exchange Commission filings.
CONTACT: Alison Taunton-Rigby, President, Chief Executive Officer of
Cambridge Biotech Corporation, 508-797-5777, or Robert Gottlieb,
Senior Vice President of Feinstein Partners, Inc., 617-577-8110
CHARLOTTE, NC -- Sept. 9, 1996 -- Piedmont Mining Company, Inc. (OTC-Bulletin Board: PIED) announced today that it has filed a
petition for relief under Chapter 11 of the U.S. Bankruptcy Code.
The filing, in U.S. Bankruptcy Court in Charlotte, N.C., follows
court confirmation of an arbitration award against Piedmont and one
of its subsidiaries in one of the pending proceedings arising out of
Piedmont's disputes with Amax Gold Inc. (NYSE: AU) in connection
with the Haile Mining Venture.
"We have determined that this action is necessary in order for us
to continue to vigorously pursue our claims against Amax Gold," said
Robert M. Shields, Jr., Piedmont's Chairman and Chief Executive
Officer. "Recent efforts to mediate our dispute with Amax Gold have
not been fruitful, so we must now resort to bankruptcy protection to
assure that we will have the opportunity for our claims to be heard
by a court."
On March 29, 1995, Piedmont and one of its subsidiaries filed
suit in South Carolina state court against Amax Gold and two of its
subsidiaries claiming, among other things, that they breached their
obligations under the Haile Mining Venture Agreement and Management
Agreement to carry out approved programs and budgets, conduct
drilling and produce a "Bankable Feasibility Study." The complaint
seeks actual and punitive damages. In August 1995, Piedmont filed
an initial calculation of damages by its damages expert. Using
several alternative methods of calculation, actual damages
assessments ranged from $38 million to $60 million.
In May 1995, Amax Gold filed a demand for arbitration of the
allocation of certain environmental expenses and filed a motion to
dismiss Piedmont's lawsuit. Piedmont's claims for breach of
contract remain in state court, while the claim against Amax Gold
for tortious interference was removed to Federal District Court.
Discovery is virtually completed in the Federal District Court case
and a hearing on Amax Gold's motion for summary judgment is
scheduled for early October. A trial date was anticipated prior to
year end. Court-ordered mediation was conducted in early September
1996.
In the meantime, in March 1996 an arbitration panel awarded Amax
Gold $1.37 million for alleged environmental costs. Judgment on the
award was entered in August 1996. The bankruptcy filing
automatically stays enforcement of the judgment. It is not yet
certain how the filing will affect the other pending proceedings,
but Piedmont intends to vigorously pursue its claims against Amax
Gold in the appropriate courts.
Piedmont reported a loss of $395,000, or $0.02 per share, in the
second quarter ended June 30, 1996, compared with a loss of
$302,000, or $0.02 per share, in the second quarter of 1995. For
the first six months of 1996, Piedmont reported a loss of $701,000,
or $0.05 per share, compared with a loss of $548,000, or $0.04 per
share, for the first six months of 1995. At June 30, 1996, Piedmont
had negative working capital of $638,000, primarily as a result of
accrual of the $1.37 million arbitration award and the funding of
operating, litigation and arbitration expenses from current assets.
At June 30, 1996, Piedmont held 192,300 shares of Amax Gold common
stock and $536,000 in cash and cash equivalents, in addition to its
interests in the Haile Property and its North Carolina properties,
and had no long-term debt.
CONTACT: Thomas L. Ross, III, Piedmont Mining Company, Inc., 704-523-6866
WILMOT, WI -- Sept. 9, 1996 -- Gander Mountain, Inc.
(Nasdaq: GNDR), today announced that on Thursday, September 5, 1996
the U.S. Bankruptcy Judge gave final approval to $25 million debtor
in possession (DIP) financing from the CIT Group/Business Credit,
Inc. of Chicago, Illinois. The financing continues to allow Gander
Mountain to do business.
The U.S. Bankruptcy Judge's approval followed negotiations
between the CIT Group/Business Credit and the Official Unsecured
Creditors Group Committee to resolve certain objections that the
Committee had raised. These negotiations resulted in an agreement
to modify the terms of the financing in a way that resulted in the
Committee withdrawing its objection.
Gander Mountain continues to work with its vendors to ship
product to stock its stores for the upcoming fall hunting and
Christmas seasons. The fall hunting and Christmas seasons represent
a substantial portion of Gander Mountain's annual sales and
profitability.
Further, the company wants to clarify published reports
regarding the hearing. Previous published reports stated that a
turnaround consultant on behalf of Gander Mountain, Inc. told the
bankruptcy court that there was no money for shareholders and that
the unsecured creditors could expect to get a return of about $.20
more on the dollar if Gander Mountain stayed in business through the
Christmas season. The actual statements made were that if a
liquidation were to take place, the shareholders could expect no
return and the unsecured creditors would receive $.20 less on the
dollar with the company not staying in business through the
Christmas season.
It is the company's intent to continue the business on-going.
The company continues to pursue alternatives for raising additional
equity and developing a plan accordingly.
Gander Mountain, Inc. is a customer-oriented specialty
merchandiser serving the outdoor recreation market. The company is
recognized as a leader in providing functional outerwear, footwear
and equipment for the hunting, fishing and camping enthusiast.
CONTACT: Kenneth C. Bloom, Executive VP-Chief Financial Officer,
of Gander Mountain, 414-862-3302; or Michael Rosenbaum or Kathy
Brunson of The Financial Relations Board, 312-266-7800
COMPANY DATA:
COMPANY CONFORMED NAME: GANDER MOUNTAIN INC
CENTRAL INDEX KEY: 0000789598
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-O
RDER HOUSES [5961]
IRS NUMBER: 391742710
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-14579
FILM NUMBER: 96625302
BUSINESS ADDRESS:
STREET 1: PO BOX 128 HGWY W
CITY: WILMOT
STATE: WI
ZIP: 53192
BUSINESS PHONE: 4148622331
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 1996
GANDER MOUNTAIN, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 0-14579 39-1742710
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
P.O. Box 128
Highway W
Wilmot, Wisconsin 53192
(Address of principal executive offices)
Registrant's telephone number, including area code: (414) 862-2331
Item 3. Bankruptcy or Receivership
On August 9, 1996, the Company and its two subsidiaries,
GRS, Inc. and GMO, Inc., filed petitions for relief under Chapter
11 of the Bankruptcy Code. The petitions were filed in the United
States Bankruptcy Court for the Eastern District of Wisconsin and
were assigned case numbers 96-26478, 96-26479 and 96-26480,
respectively. Each company is a debtor-in-possession under the
Bankruptcy Code.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press release issued by the Company on August 9, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
GANDER MOUNTAIN, INC.
By: /s/ Kenneth J. Guerrini
------------------------
Kenneth J. Guerrini
General Controller
Date: September 3, 1996
GANDER MOUNTAIN, INC.
P.O. Box 128, Hwy. W
Wilmot, Wisconsin 53192
Phone: (414) 862-2331
AT THE COMPANY:
Kenneth C. Bloom
Executive VP/Chief Financial Officer
(414) 862-3302
AT ZIGMAN JOSEPH STEPHENSON:
Linda F. Stephenson/Zigman Joseph Stephenson
100 E. Wisconsin Ave., Milwaukee, WI 53202
(414) 273-4680
FOR IMMEDIATE RELEASE
GANDER MOUNTAIN FILES PETITION TO REORGANIZE
$25 MILLION FINANCING ARRANGED FOR POST-PETITION OPERATIONS
Wilmot, Wisconsin, August 9, 1996 -- Gander Mountain, Inc.
(Nasdaq Bulletin Board: GNDR), a leading marketer of outdoor
hunting, fishing and camping goods, announced today that it and
its two wholly-owned subsidiaries, GMO, Inc. and GRS, Inc., have
filed a Voluntary Chapter 11 petition with the Federal Bankruptcy
Court as part of the continued restructuring of the firm.
The Company also announced that it had arranged for $25
million in debtor in possession financing, to be provided by The
CIT Group/Business Credit, Inc. The Company will seek Bankruptcy
Court approval for the loan. The additional working capital that
the debtor is possession loan provides will be used to purchase
additional inventory to stock the Company's twelve stores for the
upcoming fall season.
Ralph L. Freitag, Chief Executive Officer of Gander
Mountain, said the Company views the filing as a necessary
business decision. "This reorganization is a critical move to
successfully structure a new future for Gander Mountain and to
preserve the greatest value for as many stakeholders as possible,"
said Freitag. "CIT's commitment to provide this financing is a
positive reflection on the company's ability to continue its
operations and should support our efforts to attract equity
capital."
Attorneys for Gander Mountain filed the petition in Federal
Bankruptcy Court in Milwaukee on Friday afternoon. The company
will request that a hearing be held on Monday, August 12, 1996 to
seek approval for the financing and to hear other motions filed on
behalf of the Company. Company officials have indicated that it
was the desire of the company to emerge from bankruptcy as swiftly
as possible.
"We are extremely grateful to the customers, employees, and
vendors who have supported the Company through this difficult
period and we sincerely believe that this action will set a course
for future growth and profitability." Freitag said.
A Chapter 11 filing is a legal process that allows a company
to remain in business while addressing financial issues under the
protection of the court. A Chapter 11 filing differs from a
straight bankruptcy in that creditors look to the value of the
company as an ongoing business, rather than to the value of the
company upon liquidation to satisfy their claims.
Gander Mountain, Inc. is a customer-oriented specialty
merchandiser serving the outdoor recreation market. The Company
is recognized as a leader in providing functional outerwear,
footwear and equipment for the hunting, fishing and camping
enthusiast.
# # # #
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
GANDER MOUNTAIN, INC.
Date: August 31, 1996 By: /s/ Kenneth J. Guerrini
------------------------
Kenneth J. Guerrini
General Controller
PHAR-MOR, INC., AND SHOPKO STORES, INC., TO COMBINE, CREATING NEW
RETAILING COMPANY WITH 232 STORES IN 29 STATES IN A TRANSACTION
VALUED AT $1 BILLION, INCLUDING ASSUMPTION OF DEBT
YOUNGSTOWN, Ohio and GREEN BAY, Wis. -- Sept. 9, 1996 -- Phar-Mor, Inc. (Nasdaq: PMOR) and ShopKo Stores, Inc. (NYSE: SKO)
today announced that they have signed an agreement to combine their
two companies under a new holding company. The new company, which
will be called Cabot Noble, Inc., intends to file for listing on the
New York Stock Exchange.
Upon completion of the transaction, the new company will, based
on the recent results of each retailer, have estimated combined
annual sales of approximately $3.2 billion and 232 stores in 29
states. Robert Haft, current Chairman and CEO of Phar-Mor, will be
Chairman and CEO of Cabot Noble. David Schwartz will remain
President of Phar-Mor and Dale Kramer will remain President and CEO
of ShopKo.
The two companies overlap in only one market so the combination
will create minimal store redundancy. Phar-Mor and ShopKo will
continue to be headquartered in Youngstown, Ohio, and Green Bay,
Wisconsin, respectively, and both companies expect to maintain
vendor relationships and policies regarding their employees,
customers and communities.
Terms of the Transaction
The combination will be accomplished through share exchanges
with a new holding company, Cabot Noble, Inc. ShopKo and Phar-Mor
will continue as separate operating subsidiaries of Cabot Noble.
Under the terms of the proposed share exchanges:
Each share of ShopKo common stock will be exchanged for 2.4
shares of Cabot Noble stock, subject to adjustment if the value of
the exchange consideration falls outside a range of $17.25 - $18.00
per share (based on the average daily closing sale prices of the
Phar-Mor shares over a specified 30- day time period).
Each share of Phar-Mor common stock will be exchanged for one
share of Cabot Noble stock.
Upon completion of the share exchanges, SUPERVALU INC. (NYSE:
SVU), which currently owns 46 percent of ShopKo, will sell the Cabot
Noble common stock it receives in the share exchange to Cabot Noble
for an aggregate purchase price of approximately $248.4 million, consisting of approximately $208
million in cash and $40.4 million in a short-term note maturing
January 31, 1997. This represents a purchase price of $16.86 per
share of ShopKo held by SUPERVALU prior to the share exchange.
At the September 6, 1996 closing price of $16.25 for ShopKo, the
value of the share exchange represents a 6% to 11% premium for the
ShopKo shares. Based on the average closing price of ShopKo common
stock over the last 30 days, the value of the share exchange
represents a 14% to 19% premium for the ShopKo shares. After the
repurchase of Cabot Noble shares from SUPERVALU described above, the
ShopKo public shareholders will hold approximately 77 percent of the
combined company, compared to their current 54 percent ownership of
ShopKo.
The share exchanges and repurchase are expected to be accretive
to both ShopKo and Phar-Mor shareholders. Economies of scale in
logistics and buying are expected to have an additional accretive
impact. The management of both companies believes there is a
potential annual savings of approximately $15- $20 million. The
savings are expected to be phased in over the period from six to 24
months after the combination is completed.
The transaction is valued at approximately $1 billion, including
the assumption of debt. It is expected that upon consummation of
the proposed share exchange (including the repurchase of shares from
SUPERVALU) the new publicly traded company, Cabot Noble, Inc., will
have approximately 52.5 million shares outstanding, subject to
adjustment based on the exchange ratio, the exercise of other rights
to purchase shares, and other factors. The two companies expect to
conclude the transaction by December, subject to receipt of
necessary approvals.
Rational For the Transaction
As a result of this business combination, the new company will
have an expanded geographic reach and the opportunity to reduce
operating costs through administrative efficiencies and economies of
scale in logistics and buying. ShopKo has 130 stores in 15 states,
primarily in the Midwest, Pacific Northwest, and Mountain regions.
Phar-Mor has 102 stores in 18 states, primarily in Ohio,
Pennsylvania, and Virginia. About two-thirds of the two companies'
merchandising is in similar merchandise categories, particularly in
the area of pharmacy, health and beauty aids, and general
merchandise. Based on current sales figures, the companies will
have nearly $500 million of combined annual pharmacy sales, an
additional $500 million of sales in drug store-related products, and
approximately $1 billion in general merchandise sales. The
remaining $1 billion in combined new company sales includes revenues
from ShopKo's ProVantage, Inc., health care subsidiary and other
merchandise areas that the companies do not now share.
"This friendly merger brings together two companies with
complementary strengths and a single merchandising philosophy - to
give consumers value," said Mr. Haft. "Both Phar-Mor and ShopKo are
focused retailers with the commitment and management skills
necessary to succeed in a demanding retail environment that is
undergoing steady consolidation. Operating as separate entities
under a single corporate heading, we will be able to achieve a
cross- fertilization of creative ideas while leveraging general and
administrative expenses.
"We envision that Phar-Mor, with its strong position in the food
and promotional greeting card businesses, will help ShopKo expand in
those areas. At the same time, we believe that Phar-Mor will be able
to leverage ShopKo's expertise in systems and computers and that it
will be able to add in-store optical, basic clothing assortments,
jewelry and home products. We also believe that ShopKo's high-
growth ProVantage subsidiary, which specializes in prescription
benefit management (PBM), vision benefit management (VBM) and health
decision support services (DSS), is a valuable asset with
significant earnings and capital formulation opportunities. Based
on the opportunity to achieve savings and expand our product lines,
both companies determined that this business combination will help
provide for a stronger retail format and create opportunities to
build shareholder value.
"I look forward to working with the outstanding merchants at
ShopKo, including President Dale Kramer, Chief Operating Officer
Bill Podany, and Chief Financial Officer Jeff Jones. We believe
this combination will create a successful retail company that differentiates itself by offering
outstanding health services, specialty categories and general
merchandise retailing."
"This business combination clearly provides tremendous benefits
for our customers as well as our shareholders," said Dale P. Kramer,
ShopKo President and CEO. "As one of the largest discount companies
in the nation, we will increase our buying power, gain greater
efficiencies, further enhance our respective merchandising
strategies, and build off each other's strengths to provide exciting
shopping and even greater value to our customers.
"We at ShopKo are excited about Robert Haft's visionary
leadership and expect to benefit from his entrepreneurial expertise
and success in a wide range of retail categories as well as his
financial acumen. With his commitment to growing the organization,
we believe this alliance has extraordinary potential."
Closing Conditions
The transaction is subject to a number of customary closing
conditions, including but not limited to financing of at least $100
million, regulatory approvals and the approval of Phar-Mor and
ShopKo shareholders. SUPERVALU has indicated its intention to vote
46% of the ShopKo shares in favor of the transaction. Robert Haft
has agreed to use his reasonable efforts to cause Hamilton Morgan,
L.L.C., to vote the approximately 40% of the Phar-Mor shares it
beneficially owns in favor of the transaction. Hamilton Morgan is
jointly owned by Robert Haft and FoxMeyer Health Corporation.
FoxMeyer Health Corporation has not reached a conclusion as to its
position on the transaction. There can be no assurance that these
conditions will be satisfied or when satisfaction of these
conditions will occur.
The ShopKo dividend of $0.11 per share payable on September 15
to the holder of record on September 1 will be paid as announced.
Pursuant to the combination agreement with Phar-Mor, ShopKo will not
declare any dividends pending completion of the transaction. It is
expected that Cabot Noble will not pay cash dividends on its common
stock following completion of the transaction.
ShopKo Stores, Inc., is a leading regional retailer operating
130 stores in 15 states, concentrated in the Upper Midwest,
Mountain, and Pacific Northwest states and ProVantage, Inc., which
specializes in prescription benefit management (PBM), vision benefit
management (VBM), and health decision support services (DSS).
ShopKo had sales of $1.97 billion in fiscal 1996 (52 weeks ended
February 24, 1996). Its sales for the first quarter of this year
(ended June 15, 1996) were $611 million, with first quarter net
earnings of $5.8 million, or $0.18 per share.
Phar-Mor is a retail drug store chain operating 102 stores in 18
states, concentrated in Ohio, Pennsylvania and Virginia. The
company reported sales of $1.1 billion for the 52 weeks ended June
29, 1996, with pro forma net income of $3.3 million, or $0.27 per
share. For the fourth quarter (ended June 29, 1996) revenues were
$264.8 million. The company had a net loss for the quarter of $2.7
million or $0.22 per share.
This press release contains forward-looking statements regarding
projected financial results, including, without limitation,
projected sales, accretion to earnings and cost savings. The actual
results of ShopKo, Phar-Mor and Cabot Noble may differ materially
from those contained in the forward-looking statements. Factors
that may cause such differences are identifiable in ShopKo's and
Phar-Mor's Current Reports on Form 8-K dated September 7, 1996.
CONTACT: Gary Holmes of Phar-Mor Public Affairs, 212-484-7736; Daniel
O'Leary or John Ficarro of Phar-Mor Investor Relations, 330-740-
2020; or Larry Clark, ShopKo Investor Relations, 414-496-4113 or Sheree Olson of
ShopKo Public Affairs, 414-496-4186