Regional general merchandise retailer Shopko and its subsidiaries filed voluntary petitions for a court-supervised financial restructuring under Chapter 11 in the U.S. Bankruptcy Court for the District of Nebraska.
The company seeks to facilitate the restructuring as a result of excess debt and ongoing competitive pressures. During the restructuring process, Shopko plans to continue operations to serve its customers, vendors, partners and employees.
Certain Shopko pre-petition secured lenders, led by Wells Fargo as administrative agent, will provide up to $80 million in debtor-in-possession financing to help fund and protect the company’s operations through the restructuring process.
This incremental liquidity will ensure that suppliers and other business partners and vendors will be paid in a timely manner for authorized goods and services provided while the company remains under Chapter 11, in accordance with customary terms.
“This decision is a difficult, but necessary one,” said Russ Steinhorst, Shopko CEO. “In a challenging retail environment, we have had to make some very tough choices, but we are confident that by operating a smaller and more focused store footprint, we will be able to build a stronger Shopko that will better serve our customers, vendors, employees and other stakeholders through this process.”
Shopko plans to close an additional 38 stores, relocate over 20 Optical centers to freestanding locations and conduct an auction process for its pharmacy business. Throughout this process, all of Shopko’s other stores, Optical centers and pharmacies will remain open and continue to serve customers.
Despite the on-going restructuring and encouraged by the performance of the four freestanding Optical centers opened in 2018, Shopko plans to continue to grow its optical business by opening additional freestanding locations in 2019.
Kirkland & Ellis is acting as Shopko’s legal counsel, while BRG serves as its restructuring advisor and Houlihan Lokey as its financial advisor.
Founded in 1962 and headquartered in Green Bay, WI, Shopko Stores operates more than 360 stores in 26 states throughout the Central, Western and Pacific Northwest regions.