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 July 12, 1996
(Date of earliest event reported)
ERNST HOME CENTER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-24826 91-0213470
(Commission File Number) (IRS Employer Identification Number)
1511 Sixth Avenue, Seattle, 98101
Washington
(Address of principal (Zip
executive offices) Code)
Registrant's telephone number, including area code: (206) 621-6700
<PAGE>
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
(1) On July 12, 1996, Ernst Home Center, Inc. ("the Company")
and its wholly owned subsidiary EDC, Inc. ("EDC"), filed
voluntary petitions to reorganize under Chapter 11 of the Federal
Bankruptcy Code. The filings were made in the U.S. Bankruptcy
Court for the District of Delaware. The matters were assigned to
Bankruptcy Judge Peter J. Walsh, Case Numbers 96-1088PJW and 96-
1089PJW for the Company and EDC respectively.
(2) The Company entered into an agreement to modify its existing
$80 million credit facility with Congress Financial, Inc.
(Northwest) to provide for debtor-in-possession (DIP) financing,
subject to Bankruptcy Court approval. On July 12, 1996, the
Bankruptcy Court approved the $80 million DIP facility on an
interim basis. The Company plans to use the funds to meet
immediate inventory needs and for general working capital
purposes.
ITEM 7. EXHIBITS
EXHIBIT INDEX
Exhibit
Number Description
- ---------- ----------------------------------------
99.1 Press Release dated July 12, 1996
Page 2
<PAGE>
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 thereunto duly authorized.
ERNST HOME CENTER, INC.
Signature Title Date
------------------------------------------------------------------------
/s/ Michael J. Baumann Executive Vice 07/24/96
------------------------ President-Administration,
Michael J. Baumann Chief Financial Officer,
Secretary and
Treasurer - Principal
Financial Officer
For more information contact
James Fox at 206-621-3656
FOR IMMEDIATE RELEASE
July 12, 1996
ERNST HOME CENTER, INC. TO REORGANIZE UNDER CHAPTER 11
SEATTLE, WA July 12, 1996- Ernst Home Center, Inc. (NASDAQ:
ERNS) announced today a series of steps to restructure the
l03 year old retailer around a core group of stores that
have been historically profitable. Ernst and its wholly
owned subsidiary, EDC, Inc., each filed voluntary petitions
for protection under chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the District of
Delaware. The decision to file for bankruptcy protection was
prompted by recent operating losses and Ernst's need to
close unprofitable stores.
In connection with the filing, Ernst indicated that it
will close twenty five of its eighty-six
stores. A substantial portion of the inventory in the stores
will be transferred to Ernst's ongoing locations and the
remaining portion will be liquidated. Employees in the
affected stores will be reassigned to other stores to the
extent possible. Ernst also intends to take additional steps
to streamline its operations, reduce overhead, renegotiate
or reject unfavorable leases and improve operating
efficiencies.
Ernst has obtained an $80 million debtor-in-possession
financing commitment from Congress Financial, Inc.
(Northwest). Subject to Bankruptcy Court approval, Ernst
expects to use these funds to meet immediate and future
inventory needs and for general working capital purposes.
Hal Smith, Ernst's president and chief executive
officer said: "The restructuring will allow us to
concentrate on the core group of stores that have
historically been among our most profitable. This step will
enable Ernst to be a leaner, stronger company, fully focused
on serving our customers and better able to compete in the
current retail environment.
"This decision was a very difficult step for us to
take. We carefully considered what effect such a
reorganization would have on our employees, customers,
suppliers, creditors, stockholders and the communities in
which we operate, and on balance this was the best course
available to us.
"From an operating perspective, we expect this process
to have a positive impact on our
business because it will allow us to operate our retail
stores in a manner which will benefit everyone.
The debtor-in-possession loan facility will enable Ernst to
replenish its inventory and allow us to
focus on serving our loyal customers. Daily operations and
transactions which occur in the ordinary
course of business will continue as usual."
Ernst is a major home improvement, hardware and garden
retailer currently operating eighty-six stores in nine
states. Ernst serves the "do-it-yourself" and convenience
oriented customer, offering a comprehensive selection or
home improvement products, with particular emphasis in the
lawn, garden and nursery categories. Ernst's first store was
opened in 1893 in downtown Seattle, Washington.
