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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): March 8, 1999
Edison Brothers Stores, Inc.
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(Exact Name of Registrant as specified in Charter)
Delaware 1-1394 43-0254900
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
501 North Broadway
St. Louis, Missouri 63102
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(Address of principal executive offices including zip code)
(314) 331-6000
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
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Item 3. Bankruptcy or Receivership
On March 9, 1999, Edison Brothers Stores, Inc. and seven affiliated
companies (the "Company") filed in the United States Bankruptcy Court for the
District of Delaware a voluntary petition for reorganization under Chapter 11 of
title 11 of United States Code, case number 99-529 (the "Chapter 11 Filing").
The Company continues in possession of its properties and is operating and
managing its business as debtor-in-possession subject to Court approval for
certain actions of the Company.
A copy of the press release issued by the Company on March 8, 1999, reporting
the Chapter 11 Filing is filed as Exhibit 99 hereto.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
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Exhibit 99 Press Release dated March 8, 1999 issued by Registrant.
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SIGNATURES
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.
EDISON BROTHERS STORES, INC.
Date: March 16, 1999 By: /S/ John F. Burtelow
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John F. Burtelow
Chief Financial Officer
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For further information,contact:
Beth Randolph at 314/552-6709 or
Tom Goyda at 314/552-6724, both of
Shandwick
FOR IMMEDIATE RELEASE
EDISON BROTHERS TO FILE FOR CHAPTER 11
COMPANY TO CONTINUE OPERATIONS WHILE EXAMINING STRATEGIC ALTERNATIVES
ST. LOUIS, March 8, 1999---Edison Brothers Stores Inc. (NASDAQ: EDBR)
announced that tomorrow morning it will file for bankruptcy protection under
Chapter 11 of the U.S. Bankruptcy Code in Delaware.
Edison, a national retail discount chain selling apparel and footwear,
said that since its Chapter 11 reorganization in September 1997, it has
encountered severe competition and disappointing operating results that
necessitated further relief under the bankruptcy law to facilitate a
restructuring and/or sale of all or parts of the retail organization.
To assist it in pursuing those objectives, Edison announced that,
subject to approval of the bankruptcy court, it had engaged the investment
banking firm of Houlihan Lokey Howard & Zukin to explore strategic alternatives
to best serve the interests of all creditors and other parties.
"Edison Brothers believes that the provisions of the Bankruptcy Code
will enable the company to maximize value for the company's interest-holders. We
have many valuable and viable concepts that have generated significant revenues
and positive four-wall cash flow in recent years," said chairman and chief
executive officer Lawrence E. Honig. "Given a clean balance sheet and a fresh
start, we believe that the concepts will thrive."
Also subject to court approval, the company said it is continuing the
engagement of Gruppo, Levey, an investment banking firm retained earlier to sell
the company's Repp Ltd. Big & Tall menswear stores and its Repp By Mail catalog.
Daily operations in Edison's stores will continue as usual, and store
hours will remain the same. The company expects that its policies regarding
returns, exchanges, layaways and gift certificates will remain unchanged until
further notice.
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ADD ONE EDISON
The Chapter 11 filing will have no impact on the staffing at Edison's
stores and distribution centers, and the company plans to pay attractive bonuses
to retain store sales associates and chain field management personnel, as well
as a core group of headquarters personnel. The proposed retention programs are
subject to the approval of the court.
Separately, the company announced today that it eliminated about 250
positions at its headquarters and has provided a package of severance benefits
to the affected staff.
According to Honig, interruptions in the flow of merchandise hurt sales
in the first two months of 1999, and the sales deterioration likely will
continue as fresh shipments cease. In addition, Edison has been unable to
stabilize its store base because mall managers and owners have been concerned
about the company's future. Finally, the company's ability to execute its
strategies has suffered due to the departure of a number of key employees and
its inability to attract executives of similar caliber.
"Edison's sales trends turned positive in the last part of 1998, but
difficulties obtaining adequate trade credit, among other problems, have made it
impossible to continue our forward momentum," Honig said. "Questions about the
future of the company and our failure to stabilize margins fed a cycle that we
were unable to break."
Edison emerged from a previous Chapter 11 reorganization in September
1997, and a new management team took over the company in January 1998. Over the
past year, Edison's chains successfully implemented merchandising efforts to
broaden their appeal and attract more mainstream mall traffic rather than
focusing on narrow markets. The company also cut costs, primarily through a
consolidation of shared chain services at the corporate level and by
streamlining its field management structure.
Houlihan Lokey Howard & Zukin is a national investment banking firm
providing a wide range of services including mergers and acquisitions, financial
restructuring, private placements of debt and equity capital, business and
securities valuations, financial opinions, litigation support and merchant
banking services. In the last decade, Houlihan Lokey Howard & Zukin's financial
restructuring professionals have consummated over $30 billion in distressed
company transactions including some of the largest and most publicized
transactions in history.
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ADD TWO EDISON
"We are excited about the opportunity to work with Edison Brothers - a
long-time innovator in the apparel and footwear business - in realizing the
value of its concepts in the reorganization process," said Andrew Miller,
managing director of Houlihan Lokey Howard & Zukin.
Edison Brothers Stores Inc. operates Bakers and Wild Pair footwear
stores; 5-7-9 junior apparel stores; Riggings, JW, Coda and Repp Ltd. Big & Tall
menswear stores; and Repp By Mail men's catalog. With about $900 million in
annual sales and more than 1,500 stores in the United States, Canada, Puerto
Rico and the Virgin Islands, Edison is one of the largest specialty retailers of
apparel, footwear and accessories in North America.
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