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OAK BROOK, Ill. -- Clark Retail Enterprises Inc. announced that $15 million of debtor-in-possession (DIP) financing has been approved by the Illinois Bankruptcy Court.
The funding, in addition to commitments for up to $56.2 million in DIP financing from shareholder Apollo Management L.P., will allow the company to continue operations, pay employees and purchase goods and services.
"We are gratified by the court's prompt action," Clark's CEO Brandon Barnholt said. "This, combined with cash flow from operations, provides us with ample liquidity to fund operating expenses and meet our upcoming obligations. It should provide reassurance to our employees, suppliers and customers that Clark will continue to operate without interruption."
Clark's voluntarily filed for Chapter 11 bankruptcy yesterday, to alleviate what the company described as "short-term liquidity issues." Excluded from the filing is Clark's upscale White Hen Pantry Inc. subsidiary, which has more than 250 franchisees in the Chicago area
In an interview with CSNews Online, John Matthews, Clark's vice president of corporate communications, said the Chapter 11 filing, "should allow the company to alleviate its short term liquidity issues and assure the continued flow of products to its stores while it develops a plan to stabilize its financial situation."
Clark's bankruptcy filing is in stark contrast to the recent collapse of Southeastern convenience giant Swifty Serve Inc., which last week shut down more than 450 stores, leaving hundreds of employees without jobs.
Clark Retail, which ranked 14th in the Convenience Store News list of Top 50 Convenience Store Companies, was the great consolidator of the Midwest, acquiring White Hen, Wareco Services LLC and Minit Mart Foods LLC. In two years, the upstart retailer picked up 500 stores in eight deals, placing it among the elite c-store chains in the country with more than 1,300 units and $2.5 billion in annual sales.
But times have changed. Clark has been quiet the past 12 months as rivals Marathon Ashland Petroleum LLC, Alimentation Couche-Tard Inc. (ACT) and Krause Gentle Corp. step up their presence in the central United States. Moreover, many of Clark's suburban outlets are under increasing pressure as quick marts and gas pumps sprout in front of big-box competitors Costco, Dominicks and Meijer.
Matthews said he is not sure if Clark Retail will be forced to close any On the Go or Oh! Zone convenience stores. "We are constantly reviewing the efficiency and performance of our business, based on business conditions and overall operational efficiency," he said. "Any closings of retail outlets will result from operational needs. Going forward, the company may have to make adjustments in its work force, depending on business conditions and the need to improve overall operational efficiency. Any such work force reductions will be the result of operational needs, and not necessarily directly attributable to the Chapter 11 filing."