Clark DIP Financing Approved

OAK BROOK, Ill. -- Clark Retail Enterprises Inc. yesterday said it received final court approval of its $56.2 million debtor-in-possession (DIP) credit facility from Apollo Investment Fund IV L.P. and the use of cash collateral from its bank group under the pre-petition senior credit facility. The Oak Brook, Ill-based convenience store chain had received interim authority for DIP financing and use of cash collateral shortly after its voluntary Chapter 11 petition was filed last month.

The DIP financing agreement provides post-petition financing for Clark Retail to continue to purchase goods and services, pay employee salaries and benefits and fund ongoing operations and other working capital needs during its voluntary restructuring process. The cash collateral agreement permits Clark to continue to utilize cash, receivables and inventory in the normal course of business.

"We are pleased to have received the court's final approval of our post-petition funding requests, which provides significant sources of liquidity to meet our obligations during the restructuring process," said Brandon K. Barnholt, president and CEO. "With the DIP financing and use of cash collateral final orders approved by the court, all of our suppliers, vendor partners and other constituents can be confident in continuing to support us as we provide customers with quality levels of service and availability of product."

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.

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.