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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) April 30, 1999
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Montgomery Ward Holding Corp.
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(Exact name of registrant as specified in its charter)
Delaware 0-17540 36-3571585
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Montgomery Ward Plaza Chicago, Illinois 60671
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(Address of principal executive offices)
Registrant's telephone number, including area code (312) 467-2000
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On April 30, 1999, Montgomery Ward Holding Corp. (the "Company") and its
wholly owned subsidiary Montgomery Ward & Co., Incorporated ("Wards") announced
that it filed a plan of reorganization and disclosure statement with the United
States Bankruptcy Court in Delaware which, if approved, will allow the Company
to emerge from bankruptcy in August 1999. The plan of reorganization is in the
furtherance of the agreement in principle announced earlier this year between
the Creditors' Committee, GE Capital and Wards. GE Capital, Wards' majority
shareholder and substantial creditor, is a co-proponent of the plan of
reorganization along with Wards. The Bankruptcy Court has scheduled a
confirmation hearing for July 15, 1999. The plan of reorganization includes the
Company and all of its direct and indirect subsidiaries that were included under
the jointly administered bankruptcy proceeding under the caption "In re
Montgomery Ward Holding Corp., a Delaware Corporation, et. al.", Case No. 97-
1409 (PJW). Certain indirect subsidiaries of the Company were not included in
the bankruptcy filing.
If the plan of reorganization as filed is confirmed, funding for the
distribution to unsecured creditors will be provided through a $650 million
deposit in an escrow account on April 30, 1999. When Wards emerges from
bankruptcy, this money and the interest it earns will be distributed to those
creditors as specified in the plan of reorganization. In the plan of
reorganization, GE Capital will obtain rights to all the equity in the
reorganized retailer in exchange for its claims against Wards.
As part of the restructuring provided for in the plan of reorganization, GE
Capital will acquire Signature Financial/Marketing, Inc. ("Signature"), the
direct marketing arm of Wards. Signature, which was not part of Wards' Chapter
11 case, will continue to have the right to market to Wards' customers.
On April 30, 1999, Wards issued a press release that is attached as Exhibit
1 hereto. The press release is incorporated herein by reference.
Item 7. Exhibits
1. Press release issued by Montgomery Ward & Co., Incorporated on April 30,
1999.
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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.
MONTGOMERY WARD HOLDING CORP
May 4, 1999 By: /s/ Thomas J. Paup
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Thomas J. Paup
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT SUBMISSION MEDIA
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1. Montgomery Ward & Co., Incorporated Incorporated by
Press release issued on reference to Exhibit 1
April 30, 1999 of the Company's Current
Report on Form 8-K dated
May 4, 1999
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N E W S R E L E A S E Contact: Charles H. Knittle
Vice President -- Governmental Affairs and
Corporate Communications
Phone: 312-467-2025
Fax: 312-467-3975
Montgomery Ward Files Plan of Reorganization
Wards On Schedule To Emerge From Bankruptcy This Summer
For Immediate Release
CHICAGO, Ill., -- April 30, 1999 -- Montgomery Ward & Co., Incorporated
announced today that it filed a Plan of Reorganization and Disclosure Statement
with the United States Bankruptcy Court in Delaware which, if approved, will
allow the company to emerge from bankruptcy in August 1999. The Plan is in the
furtherance of the agreement in principle announced earlier this year between
the Creditors' Committee, GE Capital and Wards. GE Capital, Wards' majority
shareholder and substantial creditor, is a co-proponent of the Plan along with
Wards. The Plan provides for fair and equitable treatment of all stakeholders
and will allow Wards to successfully reorganize and emerge from Chapter 11, as
previously announced. The Bankruptcy Court has scheduled a confirmation hearing
for July 15, 1999.
If the Plan as filed is confirmed, funding for the distribution to
unsecured creditors will be provided through a $650 million deposit in an escrow
account on April 30, 1999. When Wards emerges from bankruptcy, this money and
the interest it earns will be distributed to those creditors as specified in the
Plan.
As part of the restructuring provided for in the Plan, GE Capital will
acquire The Signature Group, the direct marketing arm of Wards. Signature, which
was not part of Wards' Chapter 11 case, will continue to have the right to
market to Wards' customers. In the Plan, GE Capital will obtain rights to all
the equity in the reorganized retailer in exchange for its claims against Wards.
"The filing of this consensual Plan of Reorganization is a significant
milestone for Wards and evidence that the Company's turnaround initiatives are
working," said Roger Goddu, Chairman and CEO of Wards. "Through the course of
its restructuring, Wards has made important progress both financially and
operationally. As a result of the hard work and commitment of Wards' associates
and the support of our vendors we will emerge a stronger, more focused retail
company."
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Wards Files Plan of Reorganization -- page two
Key accomplishments which have contributed to the Company's turnaround
include:
. Focusing on one core strategy Wards full line retail stores;
. Closing more than 100 under-performing locations;
. Developing and successfully introducing a new store prototype;
. Upgrading merchandise offerings and focusing on customer service;
. Introducing a new marketing strategy targeted at core customers;
. Enhancing operations and technology infrastructure; and
. Cutting costs on a company-wide basis.
The Company's three initial prototype stores have reflected sales increases
over the prior year in excess of 40 percentage points above the combined
performance of the entire chain since their opening in September 1998. Wards
will convert 40 additional stores to the new prototype in 1999 and intends to
remodel half the chain in the next two years.
In 1998, Wards dramatically reduced its losses from continuing operations
(before taxes and reorganization costs and Signature earnings) and showed an
improvement of $585 million in earnings from continuing operations over 1997.
Gross margin dollars, a major focus of the Company, were up 18% over 1997 with
increased margins in nearly every merchandise category. The Company anticipates
a positive EBITDA (Earnings Before Interest Taxes Depreciation and Amortization)
in Fall 1999 and for the year 2000, and profitability in 2001.
Wards is one of the largest privately held retailers in the United States
and operates 252 full-line stores in 32 states.
