Exhibit 99.1
Contact: Barry Brockwell
804-784-7560
Sitrick And Company
Ann Julsen
Brenda Adrian
804-784-7578
310-788-2850
For Immediate Release
Heilig-Meyers to Restructure Under Chapter 11; Obtains Commitment for
$215 Million in Post-Petition Financing
Company To Outsource Its Credit Program to Third Party Providers
Will Close 302 Stores
Richmond, Virginia -- August 16, 2000 -- Heilig-Meyers Company
(NYSE:HMY), the nation's largest retailer of home furnishings and related items,
said today that in order to facilitate a financial restructuring that will
enable it to improve its overall operations, the Company and certain of its
subsidiaries have filed voluntary petitions for reorganization under Chapter 11
of the Bankruptcy Code. The Company said that the filing in the U.S. Bankruptcy
Court for the Eastern District of Virginia in Richmond will allow it to continue
business operations while it formulates and implements its restructuring plan.
In conjunction with the filing, the Company said that it has received a
commitment from a group of lenders led by Fleet Retail Finance, Inc. for $215
million in debtor-in-possession (DIP) financing. The post-petition financing,
which is subject to Bankruptcy Court approval, is expected, together with other
initiatives announced today, to provide the Company with funding to support its
post-petition trade and employee obligations, as well as the Company's ongoing
operating needs during the restructuring process.
"Continued disappointing operating results coupled with an inability to
secure alternate financing sources limit our ability to achieve the necessary
strategic and capital improvements to compete in today's retail marketplace,"
said Donald S. Shaffer, who was named President and Chief Executive Officer on
July 21, 2000. "Despite previous actions we have taken to reduce costs, divest
businesses which did not fit our core business strategy and close
under-performing operations, the Company's current capital structure is not in
line with its store base. The action we took today is critical to establishing a
more realistic capital structure and a stronger competitive future for
Heilig-Meyers."
"By availing ourselves of the Chapter 11 process, we believe we can
achieve an orderly restructuring that will enable us to reduce overhead
inefficiencies and focus on the operations that have consistently produced
positive results, which includes our RoomStore Division. We intend to create an
appropriate capital structure to operate the business as a viable, going
concern," he said.
Mr. Shaffer noted that the Company had identified three key initiatives
aimed at improving overall financial performance: outsourcing of its credit
program going forward, closing under-performing stores and lowering overall
costs of operations.
The Company has reached an agreement in principle, subject to
Bankruptcy Court approval, to outsource all aspects of its future Heilig-Meyers
credit operations, and expects to finalize terms of the agreement within 60
days. Effective immediately, the Heilig-Meyers stores will no longer conduct
sales transactions through the existing in-house installment program,
eliminating the Company's need to deploy capital toward funding customer
receivables. Under the agreement in principle, arrangements have been made to
immediately begin conducting third party credit transactions at the
Heilig-Meyers stores. The credit programs at the RoomStore and Homemakers
divisions will remain unchanged. "With the DIP financing in place and the
out-sourcing of the Heilig-Meyers credit program, the Company's liquidity
position will be significantly improved," said Mr. Shaffer.
He said that given the changes in the strategic direction of the
Heilig-Meyers credit program, along with cost factors associated with operating
stores in certain markets, the Company will close 302 Heilig-Meyers stores. "In
determining which stores to close, we conducted an extensive analysis of every
aspect of our store operations, including customer credit profiles, lease terms,
regional economic factors and infrastructure costs to service these stores,"
said Mr. Shaffer. The Company said it will seek Bankruptcy Court approval to
conduct inventory liquidation sales at the closing stores over the next 30 to 60
days. The 57 RoomStore locations and three Homemakers locations are not impacted
by this store closing program.
In conjunction with the store closings, the Company will lower its
overall cost structure through overhead reductions, the elimination of operating
inefficiencies and the closing of two regional distribution centers. "We must
align our infrastructure and support functions to reflect the service
requirements of our 569 ongoing stores," Mr. Shaffer said.
Mr. Shaffer said daily operations at the Company's ongoing stores and
distribution centers will continue. The Company has requested that the
Bankruptcy Court authorize it to pay employees without interruption. The Company
indicated that it was working with its suppliers to develop terms under which it
could honor commitments relative to delivery schedules for merchandise on order.
The Company has been in contact with many of its suppliers, and
believes that they will continue to support Heilig-Meyers during the
reorganization period. Mr. Shaffer said, "With our current liquidity and the DIP
financing, once approved by the Bankruptcy Court, together with other
initiatives we announced today, we believe we will have adequate financial
resources to purchase the goods and services necessary to operate our business.
We anticipate that the vast majority of our suppliers will recognize the value
of doing business with us long term."
In a closing comment Mr. Shaffer stated, "We are extremely grateful to
the customers, employees and suppliers who have supported the Company through
these challenging times, and we believe this restructuring will set the Company
on a path of future growth and profitability."
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995: The forward-looking statements made above and identified by such
words as "believes," "intend," "expects," "anticipate," reflect the Company's
reasonable judgments with respect to future events and are subject to risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements. Such factors include but are not limited to, the
customer's willingness, need and financial ability to purchase home furnishings
and related items, the costs and effectiveness of promotional activities, the
Company's ability to obtain court approval for debtor-in-possession financing,
cost of such financing as well as the impact relating to implementation of the
above outlined strategic initiatives which include outsourcing future credit
operations, closing underperforming stores and significantly lowering overhead
and infrastructure costs. The Company's ability to obtain court approval for
making payments relating to certain ongoing operating activities may also impact
the outcome of the forward looking statements. Other factors such as changes in
tax laws, consumer credit and bankruptcy trends, recessionary or expansive
trends in the Company's markets, inflation rates and regulations and laws which
affect the Company's ability to do business in its markets may also impact the
outcome of the forward-looking statements.
# # #
<PAGE>
Heilig-Meyers Locations Scheduled to be closed:
136 FLORENCE AL
137 HAMILTON AL
142 RUSSELLVILLE AL
166 DECATUR AL
236 ALEXANDER CITY AL
249 FAYETTE AL
270 ARAB AL
292 SYLACAUGA AL
380 JASPER AL
393 ANDALUSIA AL
401 GENEVA AL
409 MONROEVILLE AL
412 MONTGOMERY AL
413 BAY MINETTE AL
415 BUTLER AL
495 MONTGOMERY AL
578 BREWTON AL
732 PHOENIX AZ
733 PHOENIX AZ
734 CHANDLER AZ
736 GLENDALE AZ
753 YUMA-MAIN AZ
756 YUMA-MESA AZ
766 TEMPE AZ
767 THATCHER AZ
772 CASA GRANDE AZ
773 PHOENIX AZ
703 SAN BERNARDINO CA
704 RIALTO CA
705 BARSTOW CA
706 VICTORVILLE CA
708 HEMET CA
709 RIVERSIDE CA
711 ONTARIO CA
712 CHINO CA
713 COLTON CA
714 CORONA CA
715 BLYTHE CA
721 REDLANDS CA
723 BANNING CA
724 INDIO CA
725 CATHEDRAL CITY CA
726 TWENTYNINE PALMS CA
741 SAN DIEGO CA
742 EL CAJON CA
743 LEMON GROVE CA
744 NORTH HIGHLANDS CA
745 VISTA CA
746 ESCONDIDO CA
747 CHULA VISTA CA
748 NATIONAL CITY CA
751 EL CENTRO CA
752 BRAWLEY CA
754 SACRAMENTO CA
759 STOCKTON CA
769 LA HABRA CA
770 RIDGECREST CA
771 SACRAMENTO CA
778 DELANO CA
779 BAKERSFIELD CA
781 CULVER CITY CA
783 SANTA BARBARA CA
784 LOMPOC CA
785 SANTA MARIA CA
786 SAN LUIS OBISPO CA
787 MONROVIA CA
788 SANTA ANA CA
789 BUENA PARK CA
791 GARDEN GROVE CA
801 SAN BERNARDINO CA
805 ANTIOCH CA
809 VALLEJO CA
829 NORTH RIDGE CA
830 NORTH HOLLYWOOD CA
831 SAN FERNANDO CA
833 SIMI VALLEY CA
839 OXNARD CA
861 FRESNO CA
862 MERCED CA
863 VISALIA CA
864 HANFORD CA
865 MADERA CA
867 PORTERVILLE CA
868 TULARE CA
869 FRESNO CA
870 TURLOCK CA
871 COALINGA CA
872 DINUBA CA
873 LODI CA
874 LOS BANOS CA
875 FRESNO CA
876 FAIRFIELD CA
877 MODESTO CA
878 MANTECA CA
880 SALINAS CA
881 WATSONVILLE CA
882 SEASIDE CA
883 GILROY CA
885 HOLLISTER CA
886 CLOVIS CA
887 SELMA CA
888 REEDLEY CA
889 SANGER CA
890 PETALUMA CA
891 SANTA ROSA CA
892 UKIAH CA
893 VACAVILLE CA
1302 HESPERIA CA
776 DELTA CO
196 DELAND FL
223 OCALA FL
224 INVERNESS FL
227 SANFORD FL
248 BROOKSVILLE FL
398 MARIANNA FL
402 PORT ST. JOE FL
403 QUINCY FL
404 MILTON FL
428 LAKE CITY FL
609 TITUSVILLE FL
615 LAKELAND FL
675 LIVE OAK FL
942 JACKSONVILLE FL
952 PORT RICHEY FL
975 VERO BEACH FL
94 TOCCOA GA
115 WAYNESBORO GA
127 SANDERSVILLE GA
128 THOMSON GA
153 VIDALIA GA
195 DALTON GA
239 SYLVANIA GA
296 AUGUSTA GA
307 BRUNSWICK GA
311 LAGRANGE GA
427 HINESVILLE GA
432 HAZLEHURST GA
433 KINGSLAND GA
435 WAYCROSS GA
451 CALHOUN GA
465 BAINBRIDGE GA
912 AMERICUS GA
943 MABLETON GA
969 LAWRENCEVILLE GA
462 WASHINGTON IA
662 INDEPENDENCE IA
677 INDIANOLA IA
696 DUBUQUE IA
1024 MARSHALLTOWN IA
1096 DAVENPORT IA
808 BOISE ID
810 POCATELLO ID
822 TWIN FALLS ID
823 IDAHO FALLS ID
442 JACKSONVILLE IL
494 BEARDSTOWN IL
507 LOVES PARK IL
647 MACOMB IL
694 FREEPORT IL
333 VINCENNES IN
334 WASHINGTON IN
369 GREENSBURG IN
678 EVANSVILLE IN
157 FRANKLIN KY
329 LEBANON KY
350 PRESTONSBURG KY
385 MAYSVILLE KY
441 RUSSELLVILLE KY
497 MANCHESTER KY
1016 MURRAY KY
652 HAMMOND LA
921 BATON ROUGE LA
981 OPELOUSAS LA
1041 MINDEN LA
1043 NEW IBERIA LA
644 NEOSHO MO
235 COLUMBUS MS
253 STARKVILLE MS
279 NEW ALBANY MS
295 OXFORD MS
325 CLARKSDALE MS
375 GREENWOOD MS
437 CLEVELAND MS
496 COLUMBIA MS
505 BATESVILLE MS
579 KOSCIUSKO MS
595 NATCHEZ MS
599 VICKSBURG MS
625 BROOKHAVEN MS
628 MCCOMB MS
953 OCEAN SPRINGS MS
955 PEARL MS
958 YAZOO CITY MS
961 JACKSON MS
1013 FOREST MS
803 BILLINGS MT
812 MISSOULA MT
16 AURORA NC
19 BENSON NC
71 MARION NC
73 TABOR CITY NC
81 TROY NC
95 NEW BERN NC
230 CHARLOTTE NC
272 GREENSBORO NC
386 FRANKLIN NC
414 MORGANTON NC
937 DURHAM NC
944 HILLSBOROUGH NC
750 LAS CRUCES NM
762 CARLSBAD NM
828 CLOVIS NM
843 GRANTS NM
780 RENO NV
483 MARIETTA OH
622 VAN WERT OH
671 BELLEFONTAINE OH
679 WOOSTER OH
688 WARRENSVILLE HGHTS OH
699 MASSILLON OH
954 MANSFIELD OH
915 DUNCAN OK
990 OKMULGEE OK
993 TAHLEQUAH OK
1020 ARDMORE OK
1036 ADA OK
813 EUGENE OR
818 MEDFORD OR
470 CLEARFIELD PA
475 BELLEFONTE PA
476 LOCK HAVEN PA
697 MEADVILLE PA
1063 SCRANTON PA
1064 HAZLETON PA
37 DILLON SC
41 MULLINS SC
43 KERSHAW SC
68 CHERAW SC
105 HARTSVILLE SC
112 KINGSTREE SC
113 UNION SC
173 GAFFNEY SC
275 WINNSBORO SC
390 DENMARK SC
610 CAMDEN SC
131 BROWNSVILLE TN
146 HUNTINGDON TN
152 ALAMO TN
187 CHATTANOOGA TN
191 CLEVELAND TN
192 COLUMBIA TN
199 ELIZABETHTON TN
216 GREENEVILLE TN
240 PULASKI TN
258 LAWRENCEBURG TN
263 SAVANNAH TN
271 DECHERD TN
319 CROSSVILLE TN
320 SOUTH FULTON TN
330 LEXINGTON TN
362 UNION CITY TN
421 MEMPHIS TN
493 LEWISBURG TN
614 MEMPHIS TN
932 SULPHUR SPRINGS TX
991 MARSHALL TX
998 SHERMAN TX
1005 TEMPLE TX
1017 BAY CITY TX
1126 LUBBOCK TX
1131 TEXARKANA TX
29 EMPORIA VA
46 RADFORD VA
48 MARTINSVILLE VA
317 CHRISTIANSBURG VA
341 COLLINSVILLE VA
792 KELSO WA
793 CENTRALIA WA
796 YAKIMA WA
797 KENNEWICK WA
798 BREMERTON WA
804 SPOKANE WA
811 KENNEWICK WA
814 SPOKANE WA
819 CLARKSTON WA
89 OCEANA WV
123 RAINELLE WV
453 WESTON WV
479 KEYSER WV
594 PT. PLEASANT WV
1010 MARTINSBURG WV
1132 ADEL GA
1133 ALMA GA
1134 ASHBURN GA
1136 DOUGLAS GA
1138 HOMERVILLE GA
1139 TIFTON GA
643 FAYETTEVILLE NC
1078 DURHAM NC
1083 LEXINGTON NC
