================================================================= KMART BANKRUPTCY NEWS Issue Number 1* ----------------------------------------------------------------- Copyright 2002 (ISSN XXXX-XXXX) January 23, 2002 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- KMART BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtor's case. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Any re-mailing of KMART BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO KMART BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF KMART CORPORATION [00002] KMART'S OCTOBER 31, 2001 CONSOLIDATED BALANCE SHEET [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING [00004] KMART DEBTORS' CHAPTER 11 DATABASE [00005] LIST OF THE DEBTORS' 50-LARGEST UNSECURED CLAIM HOLDERS [00006] DEBTORS' APPLICATION FOR JOINT ADMINISTRATION OF CASES [00007] POINTERS TO COPIES OF CRITICAL PRE-PETITION DOCUMENTS KEY DATE CALENDAR ----------------- 01/22/02 Voluntary Petition Date 02/06/02 Deadline for filing Schedules of Assets and Liabilities 02/06/02 Deadline for filing Statement of Financial Affairs 02/06/02 Deadline for filing Lists of Leases and Contracts 02/11/02 Deadline to provide Utilities with adequate assurance 03/23/02 Deadline to make decisions about lease dispositions 04/22/02 Deadline to remove actions pursuant to F.R.B.P. 9027 05/22/02 Expiration of Debtor's Exclusive Plan Proposal Period 07/21/02 Expiration of Debtor's Exclusive Solicitation Period 01/21/04 Deadline for Debtor's Commencement of Avoidance Actions Organizational Meeting with UST to form Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO KMART BANKRUPTCY NEWS ----------------------------------------------------------------- KMART BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtor's case. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of KMART BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving KMART BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990, starting with Federated Department Stores. Currently, we provide similar coverage about the restructuring proceedings involving Ames Department Stores, Service Merchandise, Warnaco, Fruit of the Loom, Pillowtex, Burlington Industries, Enron Corp., Pacific Gas and Electric Company, The IT Group, Safety-Kleen, Laidlaw, Reliance Group Holdings & Reliance Financial, NationsRent, ANC Rental, Polaroid Corporation, Hayes Lemmerz, Federal-Mogul, W.R. Grace & Co., Owens Corning, Armstrong World Industries, USG Corporation, Lodgian, The FINOVA Group, Inc., Comdisco, Bridge Information Services, Imperial Sugar, The Loewen Group International, Inc., Vlasic Foods, AMF Bowling, Bethlehem Steel, LTV, Wheeling- Pittsburgh, Metals USA, Harnischfeger Industries, Inc., Exodus Communications, Winstar, Covad Communications, 360networks, ICG Communications, PSINet, Lernout & Hauspie & Dictaphone, Vencor, Inc., Sun Healthcare Group, Inc., Mariner Post-Acute & Mariner Health, Genesis Health & Multicare, and Integrated Health Services. ================================================================= [ ] YES! Please enter my personal subscription to KMART BANKRUPTCY NEWS at US$45 per issue until I tell you to cancel my subscription. Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- (Distribution to multiple professionals at the same firm is provided at no additional cost.) KMART BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtor's case. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of KMART BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF KMART CORPORATION ----------------------------------------------------------------- KMART CORPORATION 3100 West Big Beaver Road Troy, Michigan 48084 Telephone (248) 463-1000 http://www.kmartcorp.com Selling approximately $37 billion of goods each year, and employing roughly 250,000 workers, Kmart Corporation is the nation's second largest discount retailer and the third largest general merchandise retailer. Approximately 85% of United States residents live within 15 miles of one of Kmart's 2,114 discount stores. Kmart has locations in each of the 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. Stores are generally one-floor, free-standing units ranging in size from 40,000 to 190,000 square feet. Kmart owns about 120 of its stores. The rest of the stores are leased, generally under 25-year leases with 10 five-year renewal options. Kmart sells goods under various exclusive private brand names that, the Company says, provide product differentiation in the marketplace. Martha Stewart Everyday, Kmart's most recognizable private label brand, has annual sales in excess of $1 billion. Currently, Martha Stewart Everyday products are sold in the bedding, bath, outdoor living, garden, baby, tabletop and housewares departments -- and, in June 2001, introduced a new line of Martha Stewart organizing and cleaning products. Other popular destination brands at Kmart include Sesame Street, Jaclyn Smith, Route 66, Kathy Ireland, Thom McAn, White Westinghouse, Benchtop, and BestYet. Kmart operates 105 "supercenters" that combine a full grocery, deli, bakery, and video rental along with the general merchandise selection of a discount store format, and these "supercenters" are open 24-hours-a-day, seven-days-a-week. Kmart owns its Troy, Michigan, headquarters and one administrative building. The Company leases one other administrative building in Royal Oak, Michigan, and leases 18 United States distribution centers. Additionally, Kmart owns hundreds of parcels of land not currently used for store operations, and most of those parcels are rented to others. All Kmart footwear departments operate under license agreements with Meldisco, which is 49% owned by Kmart and 51% owned by Footstar, Inc. Kmart owns a 22% interest in Penske Auto Centers LLC. In November 1995, Kmart sold its auto service center business to Penske and entered into a multi-year master sub-lease agreement for the auto service center locations that are operated by Penske as Penske Auto Centers. BlueLight.com was formed in December 1999 as an independent e-commerce company, based in San Francisco, by a group of investors led by Kmart (59% ownership interest), SOFTBANK Venture Capital (18.5%), BlueLight.com management and employees (15%) and others, including Martha Stewart Living Omnimedia and Yahoo!. BlueLight isn't profitable and Kmart bought-out the initial minority investors, so BlueLight is now a wholly owned Kmart subsidiary. Borders Group, The Sports Authority and OfficeMax were spun-off from Kmart years ago. Kmart continues to guarantee many of those companies' lease obligations. The present value of those lease guarantee obligations is around $350 million. Fleming Companies, Inc., supplies all of Kmart's "Big K" and "Super K" stores with their pantry merchandise under a Five-Year Agreement dated February 2, 2001. The Agreement explicitly states its purpose and objectives: to create a strategic alliance between Fleming and Kmart to merchandise, procure and distribute pantry and supermarket products in the most cost efficient manner [and] to provide for the joint exploration, evaluation, and implementation of practices and procedures to reduce total supply chain costs and allow each party to equitably share the benefits of such practices and procedures. Termination of the Fleming Agreement requires 12-months' notice from either side, except (i) if Kmart's purchases decline by 30% or Kmart closes 30% of its stores, in either of which event, Fleming can walk or (ii) in the event of a change in control of the other party. ----------------------------------------------------------------- [00002] KMART'S OCTOBER 31, 2001 CONSOLIDATED BALANCE SHEET ----------------------------------------------------------------- KMART CORPORATION CONSOLIDATED BALANCE SHEETS At October 31, 2001 Current Assets: Cash and cash equivalents $366,000,000 Merchandise inventories 8,318,000,000 Other current assets 872,000,000 --------------- Total current assets 9,556,000,000 Property and equipment, net 6,968,000,000 Other assets and deferred charges 483,000,000 --------------- Total Assets $17,007,000,000 =============== Current Liabilities: Long-term debt due within one year $478,000,000 Trade accounts payable 3,273,000,000 Accrued payroll and other liabilities 1,438,000,000 Taxes other than income taxes 271,000,000 --------------- Total current liabilities 5,460,000,000 Long-term debt and notes payable 3,310,000,000 Capital lease obligations 881,000,000 Other long-term liabilities 612,000,000 Company obligated mandatorily redeemable convertible preferred securities of a subsidiary trust holding solely 7-3/4% convertible junior subordinated debentures of Kmart (redemption value $898,000,000) 890,000,000 Common stock, $1 par value, 1,500,000,000 shares authorized; 498,416,655 shares outstanding 498,000,000 Capital in excess of par value 1,682,000,000 Retained earnings 3,674,000,000 --------------- Total Liabilities and Shareholders' Equity $17,007,000,000 =============== *** In its Voluntary Chapter 11 Petition, Kmart discloses that *** assets total $16.3 billion at January 2, 2002, and the *** Company's Jan. 2 balance sheet shows $10.3 billion of debts *** on a consolidated basis. ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING ----------------------------------------------------------------- KMART SECURES $2 BILLION FINANCING PACKAGE AND FILES FOR CHAPTER 11 REORGANIZATION TO AGGRESSIVELY ADDRESS FINANCIAL AND OPERATIONAL CHALLENGES * All 2,114 Kmart Stores Open for Business; * Credit Cards, Gift Certificates, Store Credits To Be Honored As Usual * $2 Billion DIP Financing Package Arranged by JPMorgan Securities, Inc. and Fleet Securities, Inc.; * Includes Vendor Lien for Customary Trade Relationship Vendors; * Will Fund Operations, Including Employee Salaries and Benefits, and Post-Petition Vendor Payments During Reorganization Process * Completion of Fast-Track Reorganization Targeted for 2003 "We are determined to complete our reorganization as quickly and smoothly as possible, while taking full advantage of this chance to make a fresh start and reposition Kmart for the future," says Kmart CEO Conaway TROY, Michigan -- January 22, 2002 -- Kmart Corporation (NYSE: KM) announced today that, in order to aggressively address the financial and operational challenges that have hampered its performance, the Company and 37 of its U.S. subsidiaries have filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code. In its filings in the U.S. Bankruptcy Court for the Northern District of Illinois, in Chicago, the Company indicated that it will reorganize on a fast-track basis and has targeted emergence from chapter 11 in 2003. Kmart also announced that, to fund its turnaround and continuing operations, it has secured a $2 billion senior secured debtor-in-possession (DIP) financing facility from Credit Suisse First Boston, Fleet Retail Finance, Inc., General Electric Capital Corporation and JPMorgan Chase Bank, which will act in various capacities including as collateral monitors, documentation agents and syndication agents. The DIP facility, which remains subject to Bankruptcy Court approval, will be used to supplement the Company's existing cash flow during the reorganization process. JPMorgan Securities Inc. and Fleet Securities, Inc. arranged the financing. The Company expects to be able to access $1.15 billion of the DIP facility upon court approval of an interim financing order; the full facility is subject to final court approval at a later date. The Company said its decision to seek judicial reorganization was based on a combination of factors, including a rapid decline in its liquidity resulting from Kmart's below-plan sales and earnings performance in the fourth quarter, the evaporation of the surety bond market, and an erosion of supplier confidence. Other factors include intense competition in the discount retailing industry, unsuccessful sales and marketing initiatives, the continuing recession, and recent capital market volatility. Charles C. Conaway, Chief Executive Officer of Kmart, said: "We are committed and determined to complete our reorganization as quickly and as smoothly as possible, while taking full advantage of this chance to make a fresh start and reposition Kmart for the future. We deeply regret any adverse effect today's action will have on our associates, vendors and business partners. I also regret the impact of our filing on all Kmart shareholders, including many of our associates. But after considering a wide range of alternatives, it became clear that this course of action was the only way to truly resolve the Company's most challenging problems. I am confident that, with our tremendous resources and dedicated supplier and associate communities, Kmart will emerge from this process as a stronger, more dynamic, more profitable enterprise with a well-defined position in the discount retail sector." All 2,114 Kmart stores are open and serving customers. The Company's credit cards, checks, gift certificates and store credits will be honored as always and its return policies have not been affected by the filing. Kmart associates are being paid in the usual manner and their medical, dental, life insurance, disability, and other benefits are expected to continue without disruption. The Company's pension plan and savings plans are maintained independently of the Company and are protected under federal law. The Company will continue to administer the plans as usual. Other retiree benefits are also expected to continue without disruption. The Company also said that approximately 3.5% of its total 401(k) savings plan assets consist of Kmart shares purchased by its employees and approximately 10.5% of the assets consist of shares provided by the Company to match employee investments. Total Kmart share holdings in its 401(k) savings plan represent about 6% of Kmart's total outstanding common shares. Conaway said: "When I joined Kmart 18 months ago, I found a company with many strengths, including dedicated associates, great store locations, a proud 100-year history, and some of the best known and loved brands in retailing - including the great Kmart name itself. We remain determined to build on this foundation and continue Kmart's transformation." Kmart also announced that Ronald B. Hutchison has been named Executive Vice President and Chief Restructuring Officer, a new position, effective immediately. He and James B. Adamson, who was elected non-executive Chairman of Kmart's Board of Directors on January 17, 2002, will be actively engaged in advising Kmart on reorganization matters and working with the senior management team to rebuild and reposition the Company. Hutchison, 51, was most recently Chief Financial Officer of Advantica Restaurant Group, Inc. where he was one of the key architects of the company's successful reorganization. He was also involved in the financial reorganization of Leaseway Transportation, a transportation holding company that emerged from chapter 11 in the early 1990s. Kmart Chairman James B. Adamson said, "We are gratified by the support of our lenders in arranging our $2 billion of debtor- in-possession (DIP) financing, an important vote of confidence in the Company, our people, and our potential. We are also pleased that the banks have agreed to allow our vendors an opportunity to receive a second lien on the Company's collateral for their post- petition accounts payable, provided that the vendors resume normal trade terms and full merchandise shipments within the first 60 days of the reorganization case. With that support, and with the protection of chapter 11, we are confident the Company will move forward in a better position to restructure for the future. Fortunately, Kmart has a number of strengths upon which we can build, including a substantial core group of profitable stores in highly desirable locations." Conaway outlined the strategic, operational and financial initiatives that the Company intends to continue or implement during the reorganization process, including: * Investing in key merchandising and marketing initiatives to enhance Kmart's strategic positioning as the authority for what Moms value by offering exclusive brands that will differentiate Kmart from its competitors; * Optimizing the supply chain to maximize efficiencies and service capabilities; * Investing in critical technology, standardized information technology platforms, merchandising opportunities and supply chain enhancements; * Evaluating the performance of every store and terms of every lease in the Kmart portfolio by the end of the first quarter of 2002 with the objective of closing unprofitable or underperforming stores this year to increase cash flow and return on invested capital; * Seeking Bankruptcy Court approval to immediately terminate the leases of approximately 350 stores that were closed previously by Kmart or are currently being leased by other tenants at rents below Kmart's obligation, thereby resulting in an immediate annual savings of approximately $250 million; and * Pursuing opportunities to reduce annual expenses by an additional $350 million through reengineering the organization, staff reductions, office consolidations, and other actions. Kmart said that it filed more than 30 first day motions in the bankruptcy court in Chicago to support its approximately 240,000 associates and 4,000 vendors, together with its customers and other stakeholders. The court filings include requests to obtain interim financing authority and maintain existing cash management programs; to retain legal, financial, real estate and other professionals to support the Company's reorganization cases; and for other relief. During the restructuring process, vendors, suppliers and other business partners will be paid under normal terms for goods and services provided during the reorganization. In its filing documents, Kmart and its U.S. subsidiaries listed total assets of $17 billion of assets at book value and total liabilities of $11.3 billion as of the fiscal quarter ended October 31, 2001. Kmart's foreign subsidiaries are not covered by the filing and are operating as normal. More information about Kmart's reorganization case is available at the following toll-free numbers: Associates - (877) 638-8856 Customers - (877) 475-6278 Vendors and Suppliers - (877) 453-5693. Kmart Corporation is a $37 billion company that serves America with more than 2,100 Kmart and Kmart SuperCenter retail outlets and through its e-commerce shopping site at http://www.bluelight.com ----------------------------------------------------------------- [00004] KMART DEBTORS' CHAPTER 11 DATABASE ----------------------------------------------------------------- Debtor Entities Filing Separate Chapter 11 Petitions: Case No. Debtor -------- ------ 02-02462 Kmart Corporation of Illinois, Inc. 02-02464 Kmart of Pennsylvania LP 02-02463 Kmart of Indiana 02-02465 Kmart of North Carolina LLC 02-02466 Kmart of Texas L.P. 02-02467 Bluelight.com LLC 02-02468 Big Beaver of Florida Development LLC 02-02469 TC Group I LLC 02-02470 Kmart Michigan Property Services, L.L.C. 02-02471 Kmart Financing I 02-02472 Troy CMBS Property, L.L.C. 02-02474 Kmart Corporation 02-02473 Big Beaver Development Corporation 02-02475 Big Beaver of Guaynabo Development Corporation 02-02476 Big Beaver of Caguas Development Corporation 02-02477 BlueLight.Com, Inc 02-02478 Kmart Holdings, Inc. 02-02480 Kmart Stores of Indiana, Inc. 02-02479 Kmart of Amsterdam, NY Distribution Center, Inc. 02-02481 Kmart of Michigan, Inc. 02-02482 Kmart Stores of TNCP, Inc. 02-02483 Kmart Overseas Corporation 02-02484 JAF Inc 02-02485 VTA Inc 02-02486 Big Beaver of Caguas Development Corporation II 02-02488 K mart Pharmacies, Inc. 02-02489 Builders Square, Inc. 02-02487 Big Beaver of Carolina Development Corporation 02-02490 K Mart International Services, Inc. 02-02491 Sourcing & Technical Services Inc. 02-02492 Kmart Pharmacies of Minnesota, Inc. 02-02493 STI Merchandising, Inc. 02-02494 Kmart CMBS Financing, Inc. 02-02495 KLC, Inc. 02-02496 PMB, Inc. 02-02497 ILJ, Inc. 02-02498 KBL Holdings Inc. 02-02499 S.F.P.R., Inc. Chapter 11 Petition Date: January 22, 2002 Court: United States Bankruptcy Court Northern District of Illinois Eastern Division 219 South Dearborn Chicago, IL 60604 Telephone (312) 435-5694 Judge: The Honorable Susan Pierson Sonderby Debtors' Lead Counsel: John Wm. "Jack" Butler, Jr., Esq. Skadden, Arps, Slate, Meagher & Flom, LLP 333 West Wacker Drive Chicago, IL 60606 (312) 407-0700 Debtors' Financial Advisor: Henry S. Miller Dresdner Kleinwort Wasserstein 1301 Ave. of the Americas New York, NY 10019 Telephone (212) 969-2700 Fax (212) 969-7836 Debtors' Auditors: PricewaterhouseCoopers LLP Detroit, Michigan Debtors' Real Estate Consultant: Michael P. Deighan Rockwood/Gemini Advisors, LLC 555 Fifth Avenue New York, NY 10017-2416 Debtors' Inventory Disposition Consultant: Alan Cohen Abacus Advisory & Consulting Corp. LLC Debtors' Claims Agent: Trumbull Services, L.L.C. 4 Griffin Road North Windsor, CT 06095 Telephone (877) 876-2705 Fax (860) 683-8697 United States Trustee: Ira Bodenstein Sandra Rasnak Roman L. Sukley Office of the United States Trustee 227 West Monroe Street, Suite 3350 Chicago, IL 60606 Telephone (312) 886-5785 Fax (312) 886-5794 ----------------------------------------------------------------- [00005] LIST OF THE DEBTORS' 50-LARGEST UNSECURED CLAIM HOLDERS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Bank of New York Indenture Trustee $2,377,532,000 125 Penn Plaza for 8-3/8% Notes New York, NY 10119 due December 1, 2004; Attn: Paul Schmazel 12-1/2% Debentures Phone: 212-896-7172 due March 1, 2005; Fax: 212-896-7294 9.375% Notes due February 1, 2006; 8-1/8% Notes due December 1, 2006; 9-7/8% Notes due June 15, 2008; 7-3/4% Debentures due October 1, 2012; 8-1/4% Notes due January 1, 2002; 8-3/8% Debentures due July 1, 2022; 7.95% Debentures due February 1, 2023; and Medium Term Notes Series A, B, C, and D. BankBoston, N.A. Loan $119,910,000 100 Federal Street Boston, MA 02110 Attn: Kathleen Dimock Phone: 617-434-3830 Fax: 617-434-6685 Chase II Loan $117,775,000 c/o Chase Manhattan Bank 1 Chase Manhattan Plaza New York, NY 10081 Attn: Barry Bergman Phone: 212-270-0203 Fax: 212-270-5646 Bank of New York Loan $104,470,000 One Wall Street 8th Floor New York, NY 10286 Attn: William Barnum Phone: 212-635-1019 Fax: 212-635-1483 Credit Suisse First Boston Loan $83,198,000 11 Madison Avenue 10th Floor New York, NY 10010 Attn: Kristin Lepri Phone: 212-325-9058 Fax: 212-325-8309 First Union National Bank Loan $81,884,000 One South Penn Square 12th Floor Widener Building Philadelphia, PA 19107 Attn: Margaret J. Gibbons Phone: 267-321-6613 Fax:267-321-6700 Fleming Companies Trade $75,820,923 1945 Lakepointe Dr. PO Box 299013 Lewisville, TX 75029 Attn: Bill Marquard Phone: 972-906-8860 Fax: 972-906-8424 John Hancock Life Notes $72,674,000 Insurance Co. 200 Clarendon St. Boston, MA 02116 Attn: Roger G. Nastou Phone: 617-572-6000 Fax: 617-572-1605 Bank One, NA Loan $65,704,000 I Bank One Plaza Suite ILI-0086 Chicago, IL 60670 Attn: Debora K. Oberling Phone: 312-732-4644 Fax: 312-336-4380 Handleman Co Trade $63,679,560 500 Kirts Blvd. Troy, MI 48084 Attn: Steve Strome Phone: 248-362-4400 Fax: 248-362-3615 Buena Vista Home Video Trade $56,275,198 139 Vista Dr. Cannonsburg, PA 15317 Attn: Jim Davis Phone: 724-746-5050 Comerica Bank Loan $53,631,000 500 Woodward Avenue P.0 Box 75000 MC 3268 Detroit, MI 48275 Attn: Jennifer Pugliano Phone: 313-222-9644 Fax: 313-222-9514 Bank of America Loan $44,925,000 100 N Tryon Street 12th Floor NCI-007-12-08 Charlotte, NC 28255 Attn: Jon Barnes Phone: 704-387-4366 Fax: 704-009-0768 Nintendo of America Inc. Trade $44,913,692 4820 150th Ave. NE Redmond, WA 98052 Attn: Randy Peretzman Phone: 425-861-2059 Fax: 425-882-3585 Mattel Toys Trade $44,120,598 501 Meacham Blvd Fort Worth, TX 76106 Attn: Tom Bonge Phone: 310-252-6271 Fax: 817-302-3391 Key Bank National Loan $38,930,000 Association 127 Public Square 6th Floor Cleveland, OH 44114-1306 Attn: J.T. Taylor Phone: 216-689-3589 Fax: 216-689-4981 Mellon Bank, N.A. Loan $38,930,000 One Mellon Bank Center Room 4530 Pittsburgh, PA 15258-0001 Attn: Louis Flori Phone: 412-234-7298 Fax: 412-236-1914 Wells Fargo Bank Loan $38,930,000 230 West Monroe Suite 2900 Chicago, IL 60606 Attn: Pete Martinets Phone: 312-845-8605 Fax: 312-553-4783 Prudential Securities Loan $37,205,000 Credit Corp. One New York Plaza 16th Floor New York, NY 10292-2016 Attn: Jeffrey K. French Phone: 212-778-1540 Fax: 212-778-2535 Sumitomo Mitsui Loan $37,205,000 Banking Corporation 233 South Wacker Drive Suite 4010 Chicago, IL 60606 Attn: John Kemper Banking Corporation Phone: 312-876-7797 Fax: 312-876-6436 Teachers Insurance & Notes $36,158,000 Annuity Association - CREF 730 3rd Ave., Flr. 26 New York, NY 10017 Attn: Michael O'Kane Phone: 212-090-9000 Fax: 212-916-6690 Mizuho Holdings Inc. Loan $34,577,000 Marunouchi Center Bldg. 6-1 Marunouchi, 1-Chome Chiyoda-ku, Tokyo 100-8240 JAPAN Phone: 81-3-5224-1111 Fax: 81-3-3215-4616 Twentieth Century Fox Trade $34,219,742 Home Entertainment P.O. Box 900 Beverly Hills, CA 90213 Attn: Mike Weetman Phone: 310-369-1484 Fax: 310-369-4713 Bank of Scotland Loan $32,852,000 565 Fifth Avenue 5th Floor New York, NY 10017 Attn: Karim McLean Phone: 212-450-0816 Fax: 212-682-5720 Firstar Bank, N.A. Loan $31,867,000 Retail and Approval Div. Mail Code SL-TW-12MP St. Louis, Missouri 63101 Attn: Tom Bayer Phone: 314-418-3993 Fax: 314-418-1963 Universal Music & Video Trade $30,750,077 10 Universal City Plaza Suite 400 Universal City, CA 91608 Attn: Joe Flores Phone: 818-777-4535 Fax: 818-866-1599 State of Wisconsin Notes $30,000,000 Investment Board Intermed. Gov/Corp Fd. 121 E. Wilson St. Madison, WI 53703 Attn: Daryl Moe Phone: 608-266-2381 Fax: 608-266-2436 Sara Lee Corp Trade $28,382,838 P.O. Box 2760 Winston-Salem, NC 27102 Attn: John Piazza Phone: 910-519-7592 Fax: 336-519-716 National City Bank, Loan $26,774,000 Columbus 155 East Broad Street Columbus, OH 43251-0019 Attn: Jeffrey L. Hawthorne Phone: 614-463-7298 Fax: 614-463-71911 Deutsche Bank AG Loan $26,610,000 31 West 52nd Sheet New York, NY 10019 Attn: Alexander Karow Phone: 212-469-8532 Fax: 212-469-8212 Northwestern Mutual Notes $25,000,000 Series Fund (Balanced) 720 E. Wisconsin Ave. Milwaukee, W153202 Attn: Timothy S. Collins Phone: 414-665-1444 Fax: 414-625-2639 Lehman Commercial Loan $24,885,000 Paper Inc. Lehman Brothers Inc. 3 World Financial Center 11th Floor New York, NY 10285 Attn: Michael O'Brien Phone: 212-526-0437 Fax: 212-526-7691 Metropolitan Life Notes $23,800,000 Insurance Co. 1 Madison Ave. New York, NY 10010 Attn: Thomas E. Lenihan Phone: 973-254-3000 Fax: 973-254-3052 Vanguard Total Bond Notes $23,500,000 Market Index Fund 100 Vanguard Blvd. #M32 Malvern, PA 19355 Attn: Felix B. Lim Phone: 610-669-1000 Fax: 610-669-6246 Combine International Trade $22,962,117 354 Indusco Court Troy, MI 48083 Attn: Shrik Metha Phone: 248-595-9900 Fax: 248-585-8641 Teacher Retirement Notes $22,890,000 System of Texas 1000 Red River St. Austin, TX 78701 Attn: Herman Martina Phone: 512-397-6400 Fax: 512-370-0568 Duracell International Trade $22,886,461 Prudential Center 10th Floor Boston, MA 02199 Attn: Don Hoeder Phone: 800-544-0047 Fax: 617-421-7123 Michigan National Loan $21,518,000 Bank of Detroit 2600 W. Big Beaver Troy, M148084 Attn: Jason W. Bierlein Bank of Detroit Phone: 248-822-5702 Fax: 248-637-5003 Warner Home Video Trade $21,013,625 Div. of Time 4000 Warner Blvd. Burbank, CA 91522 Attn: John Quinn Phone: 818-954-6677 Fax: 818-954-6102 Transamerica Life Notes $20,750,000 Insurance & Annuity Co. S/A 433 Edgewood Road NE Cedar Rapids, IA 54499 Attn: Douglas Kolsrud Phone: 319-363-5400 Fax: 319-369-2009 Eveready Battery Trade $20,002,598 Company Inc. 16401 Swingley Ridge Rd. Chesterfield, MO 6017 Attn: Alicia Bryant Phone: 800-323-8177 Fax: 314-733-4001 General Electric Lamp Trade $19,860,502 2300 Meijer Drive Troy, MI 48084 Attn: Dave Dobson Phone: 248-280-4885 Fidelity High Income Fund Notes $19,572,000 82 Devonshire Boston, MA 02109 Arm: Matthew Conti Phone: 617-563-7000 Fax: 617-570-0276 Loomis Sayles Bond Fund Notes $19,190,000 1 Financial Center Floor 34 Boston, MA 02111 Attn: Daniel J. Fuss Phone: 617-482-2450 Fax: 617-082-2828 Principal Life Notes $19,000,000 Insurance Co. 711 High St. Des Moines, IA 50392 Attn: Richard W. Waugh.. Phone: 515-247-5111 Fax: 515-248-2490 Fisher Price Inc. Trade $18,477,874 Credit Department 636 Girard Ave. East Aurora, NY 14052 Arm: Jerry Cleary Phone: 212-620-8369 Fax: 716-687-3476 Fidelity Asset Manager Notes $18,350,000 Fund (Aggrgtd) 82 Devonshire Boston, MA 02109 Attn: Matthew Conti Phone: 617-563-7000 Fax: 617-570-0276 Electronic Arts Trade $18,203,561 209 Redwood Shores Parkway Redwood City, CA 94065 Arm: Larry Probst Phone: 650-628-1500 Fax: 650-628-1414 New York Life Notes $18,071,000 Insurance Co. 51 Madison Ave. New York, NY 10010 Attn: Celia Holtzberg Phone: 212-576-7008 Fax: 212-5763418 Northwestern Mutual Notes $17,781,000 Life Insurance Co. 720 E. Wisconsin Ave. Milwaukee, W1 53202 Attn: Timothy S. Collins Phone: 414-665-1444 Fax: 414-625-2639 ----------------------------------------------------------------- [00006] DEBTORS' APPLICATION FOR JOINT ADMINISTRATION OF CASES ----------------------------------------------------------------- Kmart Corporation and its 37 debtor-affiliates sought and obtained an order providing joint administration of their chapter 11 cases pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure. John Wm. Butler, Jr., Esq., at Skadden Arps Slate Meagher & Flom, explains that joint administration of the Debtors' chapter 11 cases will permit the Clerk of Court to use a single general docket for all of the cases. This will save time and money and avoid duplicative and potentially confusing filings by permitting counsel for all parties-in-interest to: (a) use a single caption on the numerous documents that will be served and filed herein, and (b) file the papers in one cases rather than in multiple cases. Finding that joint administration of the Debtors' chapter 11 cases is appropriate, Judge Sonderby directs that Kmart's cases be consolidated for administrative purposes only and that all pleadings and papers filed in these cases be captioned: UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) Case No. 02-02474 ) (Jointly Administered) KMART CORPORATION, ) Chapter 11 et al., ) Hon. Susan P. Sonderby ) Debtors. ) Hearing Date: ____________ ) Hearing Time: ____________ Judge Sonderby makes it clear that her Order neither contemplates a substantive consolidation of the Debtors' estates nor prejudices the right of any party-in-interest to seek a substantive consolidation of the Debtors' estates. ----------------------------------------------------------------- [00007] POINTERS TO COPIES OF CRITICAL PRE-PETITION DOCUMENTS ----------------------------------------------------------------- SYNDICATED BANK LOAN AGREEMENTS ------------------------------- Detailed profiles and full-text copies of: (A) the $1.1 billion CREDIT AGREEMENT, dated as of December 6, 1999, among KMART CORPORATION, as Borrower, and THE CHASE MANHATTAN BANK, as Administrative Agent for a consortium of lenders, and (B) the $400 million 364-DAY CREDIT AGREEMENT, dated as of December 6, 1999, as amended and extended, among KMART CORPORATION, CHASE, as Agent, and a group of Lenders, are available at: http://www.LoanDataSource.com/bin/search?query=kmar;bor=Borrowers LoanDataSource.com provides windows into banks' syndicated loan portfolios and provides detailed profiles of syndicated credit agreements. LoanDataSource answers a question like, "Who owes Citibank how much at what time?" and "Who are Kmart's lenders?" LoanDataSource holds information on over $300 billion of corporate loans obtained from public-data sources and provides immediate access to the actual credit documents. FLEMING COMPANIES DISTRIBUTION AGREEMENT --------------------------------------- Kmart's AGREEMENT dated as of February 2, 2001 with FLEMING COMPANIES, INC., is available at: http://www.ResearchArchives.com/bin/download?id=020122220613 MARTHA STEWART LICENSE AGREEMENT -------------------------------- The License Agreement dated January 28, 1997, between MARTHA STEWART LIVING OMNIMEDIA LLC, and KMART CORPORATION, is available at: http://www.ResearchArchives.com/bin/download?id=020123014712 BOND INDENTURES & UNDERWRITING AGREEMENTS ----------------------------------------- The INDENTURE dated as of December 28, 1992, providing for the execution and delivery of $100,505,000 Collateralized Lease Revenue Bonds (Kmart Corporation Leased Facilities) Series 1992 A, Series 1992 B, Series 1992 C and Series 1992 D, is available at: http://www.ResearchArchives.com/bin/download?id=020122234937 The INDENTURE, dated as of June 6, 1996, between Kmart Corporation, as Issuer, and The Bank of New York, as Trustee, governing the Subordinated Debentures, is available at: http://www.ResearchArchives.com/bin/download?id=020122192159 The FIRST SUPPLEMENTAL INDENTURE, dated as of June 6, 1996, under the INDENTURE, dated as of June 6, 1996, between Kmart Corporation, as Issuer, and The Bank of New York, as Trustee, governing the 7-3/4% Trust Convertible Preferred Securities, is available at: http://www.ResearchArchives.com/bin/download?id=020122193611 The FIRST SUPPLEMENTAL INDENTURE dated as of December 13, 1999, between Kmart Corporation, the COMPANY, and The Bank of New York as trustee, governing the 8-3/8% Notes Due 2004, is available at: http://www.ResearchArchives.com/bin/download?id=020122203225 The SECOND SUPPLEMENTAL INDENTURE dated as of June 30, 2001, between Kmart Corporation, as Issuer, and The Bank of New York as Trustee, governing the 9.375% Notes Due 2006, is available at: http://www.ResearchArchives.com/bin/download?id=020122204359 The THIRD SUPPLEMENTAL INDENTURE between Kmart Corporation, as Issuer, and The Bank of New York as Trustee, Dated as of June 19, 2001 governing the 9-7/8% Notes Due June 15, 2008: http://www.ResearchArchives.com/bin/download?id=020122211713 The INDENTURE, dated as of December 13, 1999, among Kmart Corporation, as Issuer, and The Bank of New York, as Trustee, governing the Senior Debt Securities, is available at: http://www.ResearchArchives.com/bin/download?id=020122211109 The PURCHASE AGREEMENT dated as of June 14, 2001, for $430,000,000 of 9-7/8% NOTES DUE 2008 among KMART CORPORATION and CREDIT SUISSE FIRST BOSTON CORPORATION and J.P. MORGAN SECURITIES INC, as representatives for Credit Suisse First Boston Corporation, J.P. Morgan Securities Inc., BNY Capital Markets, Inc., Fleet Securities, Inc., and Banc One Capital Markets, Inc., is available at: http://www.ResearchArchives.com/bin/download?id=020122210413 The UNDERWRITING AGREEMENT dated January 25, 2001, among Lehman Brothers Inc., Chase Securities Inc., as Representatives of the Underwriters (including Credit Suisse First Boston Corporation, Blaylock & Partners, Inc., First Union Securities, Inc., Fleet Securities, Inc., and The Williams Capital Group, L.P.), entered into in connection with the issue of $400,000,000 of Kmart's 9.375% Notes Due 2006, is available at: http://www.ResearchArchives.com/bin/download?id=020122222229 OTHER FINANCING AGREEMENTS -------------------------- The NOTE PURCHASE AGREEMENT Dated as of December 1, 1992, related to the KMART CORPORATION $8,555,278 8.791612% Collateralized Promissory Notes Due June 1, 2013, is available at: http://www.ResearchArchives.com/bin/download?id=020122233809 The $8,555,278 KMART CORPORATION 8.791612% COLLATERALIZED PROMISSORY NOTE DUE JUNE 1, 2013, DATED AS OF DECEMBER 1, 1992, is available at: http://www.ResearchArchives.com/bin/download?id=020122234337 NOTE PURCHASE AGREEEMENT for KMART CORPORATION 8.20% KMART COLLATERALIZED PROMISSORY NOTES DUE 2018, DATED AS OF JANUARY 21, 1993, is available at: http://www.ResearchArchives.com/bin/download?id=020122231503 The $64,523,000 8.20% Collateralized Promissory Note Due 2018, issued by Kmart Corporation, and dated as of January 21, 1993, is available at: http://www.ResearchArchives.com/bin/download?id=020122232029 The NOTE PURCHASE AND PARTICIPATION AGREEMENT Dated as of May 28, 1993, Relating to the Issuance by KMART CORPORATION of its 7.05% SERIES A SENIOR SECURED NOTES DUE 2009 and 7.45% SERIES B SENIOR SECURED NOTES DUE 2013 In the Aggregate Principal Amount of $42,000,000 Relating to two stores and a warehouse, is available at: http://www.ResearchArchives.com/bin/download?id=020122225419 The TRUST INDENTURE, dated as of May 28, 1993, delivered by KMART CORPORATION, in connection with 7.05% Series A Senior Secured Notes due 2009 in the aggregate principal amount of $28,000,000, and its 7.45% Series B Senior Secured Notes due 2013 in the aggregate principal amount of $14,000,000, is available at: http://www.ResearchArchives.com/bin/download?id=020122230749 The NOTE PURCHASE AGREEMENT dated as of May 29, 1992, among Kmart Corporation, and The Bank of New York, as Purchaser, for the $8,135,000 8.95% Collateralized Promissory Note Due 2007 and the $29,545,000 9.35% Collateralized Promissory Note Due 2022, is available at: http://www.ResearchArchives.com/bin/download?id=020122221152 The $8,135,000 8.95% COLLATERALIZED PROMISSORY NOTE DUE 2007 dated as of May 29, 1992, issued by KMART CORPORATION, is available at: http://www.ResearchArchives.com/bin/download?id=020122222017 The $29,545,000 9.35% COLLATERALIZED PROMISSORY NOTE DUE 2022 dated as of May 29, 1992, issued by KMART CORPORATION, is available at: http://www.ResearchArchives.com/bin/download?id=020122222651 The NOTE AGREEMENT Dated as of January 1, 1992, Re: $71,417,590 9.06% Senior Secured Notes Due February 1, 2012, issued by KMART CORPORATION, is available at: http://www.ResearchArchives.com/bin/download?id=020122223316 The $71,417,590 9.06% Senior Secured Note, Due February 1, 2012, dated as of February 1, 1992, issued by KMART CORPORATION, is available at: http://www.ResearchArchives.com/bin/download?id=020122224748 The TRUST INDENTURE dated as of January 1, 1992, entered into by KMART CORPORATION, conveying collateral to secure repayment of the $71,417,590 9.06% Senior Secured Notes Due February 1, 2012, is available at: http://www.ResearchArchives.com/bin/download?id=020122224005 EXECUTIVE EMPLOYMENT AGREEMENTS ------------------------------- CEO CHARLES C. CONAWAY's Employment Agreement (paying him a $1,400,000 annual base salary) dated May 30, 2000, and an incorporated COVENANT NOT TO SUE AND FULL AND COMPLETE RELEASE OF LIABILITY is available at: http://www.ResearchArchives.com/bin/download?id=020122221909 An AMENDMENT to CEO CHARLES C. CONAWAY's Employment Agreement, effective as of May 15, 2001, is available at: http://www.ResearchArchives.com/bin/download?id=020122221000 Kmart's Employment Agreement with Warren Flick (President & General Merchandise Manager for U.S. Kmart Stores) dated December 5, 1995, is available at: http://www.ResearchArchives.com/bin/download?id=020122212924 EMPLOYMENT-RELATED PLANS & PROGRAMS ----------------------------------- The KMART CORPORATION DIRECTORS RETIREMENT PLAN, effective as of May 1, 1984, is available at: http://www.ResearchArchives.com/bin/download?id=020122205039 The AMENDED AND RESTATED KMART CORPORATION DIRECTORS RETIREMENT PLAN, effective as of May 1, 1984 and amended June 20, 1995 and September 19, 1995, is available at: http://www.ResearchArchives.com/bin/download?id=020122213939 KMART CORPORATION EMPLOYEE SAVINGS PLAN, amended and restated to take effect on January 1, 1994, is available at: http://www.ResearchArchives.com/bin/download?id=020122222607 The KMART CORPORATION DIRECTORS STOCK PLAN dated December 16, 1991 and amended on June 3, 1994 and March 28, 1995, is available at: http://www.ResearchArchives.com/bin/download?id=020122203046 The KMART CORPORATION AMENDED AND RESTATED DIRECTORS STOCK PLAN dated December 16, 1991 and amended March 28, 1995 and as of January 1, 1996, is available at: http://www.ResearchArchives.com/bin/download?id=020122212512 The KMART CORPORATION AMENDED AND RESTATED DIRECTORS STOCK PLAN dated December 16, 1991 and amended as of March 28, 1995, January 1, 1996, August 20, 1996, December 16, 1997 and March 16, 1999, is available at: http://www.ResearchArchives.com/bin/download?id=020122212356 The [undated] KMART CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN is available at: http://www.ResearchArchives.com/bin/download?id=020122224407 The KMART CORPORATION DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS dated December 18, 1990, as amended December 16, 1991 and March 28, 1995 is available at: http://www.ResearchArchives.com/bin/download?id=020122213437 The KMART CORPORATION DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS dated December 18, 1990 and amended as of December 16, 1991, March 28, 1995, September 19, 1995, December 16, 1997 and March 16, 1999, is available at: http://www.ResearchArchives.com/bin/download?id=020122212035 The AMENDED AND RESTATED KMART CORPORATION ANNUAL INCENTIVE BONUS PLAN dated April 22, 1994, is available at: http://www.ResearchArchives.com/bin/download?id=020122203942 The AMENDED AND RESTATED KMART CORPORATION ANNUAL INCENTIVE BONUS PLAN adopted April 22, 1994 and last amended July 17, 2001, is available at: http://www.ResearchArchives.com/bin/download?id=020122221226 The [undated] AMENDED AND RESTATED KMART CORPORATION MANAGEMENT STOCK PURCHASE PLAN allowing purchases to be made until March 15, 2004, is available at: http://www.ResearchArchives.com/bin/download?id=020122222229 The AMENDED AND RESTATED KMART CORPORATION MANAGEMENT STOCK PURCHASE PLAN adopted April 22, 1994; amended and restated December 20, 1994; and amended June 20, 1995, December 1, 1995, August 20, 1996, July 18, 2000 and September 19, 2000, is available at: http://www.ResearchArchives.com/bin/download?id=020122215255 The KMART CORPORATION 1997 LONG-TERM EQUITY COMPENSATION PLAN adopted March 18, 1997 and amended as of May 16, 2000, July 18, 2000 and November 21, 2000, is available at: http://www.ResearchArchives.com/bin/download?id=020122215833 The AMENDED AND RESTATED KMART CORPORATION SPECIAL SEVERANCE PLAN executed as of the 21st of November 2000, is available at: http://www.ResearchArchives.com/bin/download?id=020122220036 The SUPPLEMENTAL PENSION BENEFIT PLAN for K MART CORPORATION dated September 18, 1990, is available at: http://www.ResearchArchives.com/bin/download?id=020122204441 The KMART CORPORATION 1998 MANAGEMENT DEFERRED COMPENSATION AND RESTORATION PLAN (Effective January 1, 1998) is available at: http://www.ResearchArchives.com/bin/download?id=020122211740 The AMENDED AND RESTATED KMART CORPORATION 1998 MANAGEMENT DEFERRED COMPENSATION AND RESTORATION PLAN (Effective January 1, 1998; as amended and restated as of September 1, 1998) is available at: http://www.ResearchArchives.com/bin/download?id=020122213221 The AMENDED AND RESTATED KMART CORPORATION 1998 MANAGEMENT DEFERRED COMPENSATION AND RESTORATION PLAN, effective January 1, 1998; amended and restated as of September 1, 1998; and further amended as of September 19, 2000, is available at: http://www.ResearchArchives.com/bin/download?id=020122220237 The KMART CORPORATION SPECIAL SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN effective April 1, 2001, is available at: http://www.ResearchArchives.com/bin/download?id=020122221439 The KMART CORPORATION 2001 BROAD-BASED EMPLOYEE LONG-TERM EQUITY COMPENSATION PLAN adopted January 16, 2001, is available at: http://www.ResearchArchives.com/bin/download?id=020122214537 The KMART CORPORATION LONG-TERM CASH INCENTIVE PLAN dated August 15, 2001, is available at: http://www.ResearchArchives.com/bin/download?id=020122221725 The KMART CORPORATION 1992 STOCK OPTION PLAN adopted by the Board of Directors on January 21, 1992, and subject to approval by the stockholders of the Company on May 27, 1992, is available at: http://www.ResearchArchives.com/bin/download?id=020122202712 The KMART CORPORATION 1992 STOCK OPTION PLAN, as amended through September 19, 2000, is available at: http://www.ResearchArchives.com/bin/download?id=020122215030 The KMART CORPORATION 1981 STOCK OPTION PLAN, adopted by the Board of Directors on August 18, 1981 and which became effective on May 25, 1982 upon approval by stockholders, as amended by action of the Board of Directors on Match 25, 1986, which action was approved by stockholders on May 27, 1986, and further amended by action of the Board of Directors on July 21, 1987 and September 1, 2000, is available at: http://www.ResearchArchives.com/bin/download?id=020122214928 The KMART CORPORATION 1973 STOCK OPTION PLAN, as amended by actions of the Board of Directors of Kmart Corporation on January 21, 1992, July 16, 2000 and September, 2000, is available at: http://www.ResearchArchives.com/bin/download?id=020122214725 *** End of Issue No. 1 *** ------------------------------------------------------------------------- Peter A. Chapman peter@bankrupt.com http://bankrupt.com ------------------------------------------------------------------------- Recommended Reading: Professor Stuart Gilson's newest title, "Creating Value Through Corporate Restructuring: Case Studies in Bankruptcies, Buyouts, and Breakups." List Price: $79.95 -- Discounted to $55.96 at http://amazon.com/exec/obidos/ASIN/0471405590/internetbankrupt -------------------------------------------------------------------------