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): February 1, 1999
Montgomery Ward Holding Corp.
(Exact name of registrant as specified in its charter)
Delaware 0-17540 36-3571585
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Montgomery Ward Plaza
Chicago, Illinois 60671
(Address of principal executive offices)
Registrant's telephone number, including area code: (312) 467-2000
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On February 1, 1999, Montgomery Ward Holding Corp. (the "Company") and
its wholly owned subsidiary Montgomery Ward & Co., Incorporated ("Wards")
announced that the Company will emerge from Chapter 11 bankruptcy protection in
mid-1999 as a result of an agreement reached with Wards' Creditors' Committee.
The agreement 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.
As a first step in the agreement, General Electric Capital Corporation
("GE Capital"), a major shareholder and creditor, is to acquire Signature
Financial/Marketing, Inc., the profitable direct marketing arm of Wards, which
was not part of the retailer's general bankruptcy filing. Wards will then place
a sum in a fund to settle court-approved pre-bankruptcy unsecured claims of
creditors other than GE Capital. GE Capital and Wards' management will receive
the equity in the reorganized retailer.
Wards plans to file a fully consensual plan of reorganization with the
court in the next few weeks. Until a reorganization plan is confirmed, GE
Capital, as agent, will recommend extending the current $1 billion
debtor-in-possession ("DIP") facility through the end of the year. Upon
finalization of the reorganization plan, Wards will pay off its DIP facility and
then enter into appropriate new financing arrangements.
On February 1, 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 February 1,
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
February 3, 199 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
1. Montgomery Ward & Co., Incorporated Incorporated by
Press release issued on reference to Exhibit 1
February 1, 1999 of the Company's Current
Report on Form 8-K dated
February 3, 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
Wards To Emerge From Bankruptcy In Mid 1999
Agreement Reached With Creditors' Committee
Chain Shows Solid Improvement In All Areas During Turnaround
For Immediate Release
CHICAGO, Ill., February 1, 1999 - Montgomery Ward & Co., Incorporated announced
today it will emerge from Chapter 11 bankruptcy protection in mid 1999 as a
result of an agreement reached with Wards' Creditors' Committee.
As a first step in the agreement, GE Capital, a major creditor, is to
acquire The Signature Group, the profitable direct marketing arm of Wards which
was not part of the retailer's general bankruptcy filing. Wards will then place
a sum in a fund to settle court-approved pre-bankruptcy unsecured claims of
creditors other than GE Capital. GE Capital and Wards management will receive
the equity in the reorganized retailer.
Wards plans to file a fully consensual plan of reorganization with the
court in the next few weeks. Until a reorganization plan is confirmed, GE
Capital, as agent, will recommend extending the current $1 billion DIP facility
through the end of the year. Upon finalization of the reorganization plan, Wards
will pay off its DIP facility and then enter into appropriate new financing
arrangements.
In the last 18 months, Wards closed more than 100 under-performing stores,
developed and tested new prototype stores, reduced staff and dramatically
changed its marketing strategy. The changes are paying off. In the critical 1998
holiday selling season, Wards total company same store sales increased 3
percent. For the month of December 1998, it will report a positive EBIT from
retail operations of $12 million and a positive EBITDA of $31 million.
"During its restructuring, Wards has demonstrated solid and dramatic
improvement in all phases of its business and independent consumer surveys
indicate a remarkably enthusiastic response," said Roger Goddu, chairman and
chief executive officer. "Financial performance has consistently improved
throughout the restructuring and we are confident in our ability to continue to
deliver these improvements in 1999 and beyond. Wards three prototype stores
averaged same store sales increases of over 40 percent for the period of
September 1998 through January 1999. As a result, the company is pursuing an
aggressive remodel program and plans to remodel half the chain by 2001.
"We are particularly appreciative of the exceptional dedication and loyalty of
our 40,000 associates," Goddu added. "Likewise, we thank our vendors for their
understanding and support during our reorganization."
Edward Stewart, executive vice president, GE Capital, said, "In a tough
retail environment, Wards' management continues to make enormous progress. Under
the proposed plan, Wards will have the opportunity to rebuild, Signature will
accelerate its growth outside of the Wards customer base, and creditors will see
an immediate recovery. That is very good news for everyone - employees,
creditors, vendors, and GE Capital."
Wards, which served 25 million people in 1998, has retail sales in excess
of $3 billion annually and operates 252 stores in 32 states.
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