Pay 'N Pak Stores, which filed for protection under federal bankruptcy laws over the weekend, says its home-improvement stores in 14 Western states will remain open and its 2,800 employees will keep their jobs.
Pay 'N Pak Stores and parent company PNP Holdings Corp. filed for protection from creditors Saturday under Chapter 11 of the Bankruptcy Code.The retailer has about $245 million in long-term debt from a leveraged buyout in 1987. Sales for the year ending February 1991 were $498 million, but the company lost $8.4 million.
In a statement, Pay 'N Pak said the company had reached agreement with lenders, led by Manufacturers Hanover Trust, for a $100 million line of credit to assure that stores will remain stocked.
Pay 'N Pak began selling off its least profitable stores in early August and operates 78 retail outlets, including 49 in Oregon and Washington and five in Utah, said company spokeswoman Rivian Bell.
Bell said the filing would enable the stores to obtain additional merchandise. "No employees will lose their jobs as a result of this," she said.
Company chairman John Markley said the Chapter 11 filing and financing would increase the company's line of credit by $40 million and make the company easier to operate.
Losses in the past four years have amounted to nearly $40 million, including $25 million in fiscal 1988 and 1989 before Markley joined the company.
In May, the company defaulted on $7.5 million in bond interest payments and missed a $5 million loan payment to lenders.
In the past 12 months, the company closed a distribution center in California, sold a corporate jet and trimmed personnel. On Aug. 8 it announced it was closing 24 stores in California, leaving two open in that state. About 700 workers are losing their jobs in California.
Other states with Pay 'N Pak stores include Colorado, Idaho, Kansas, Nebraska, Nevada, South Dakota, Montana, Hawaii and Alaska.
Pay 'N Pak Stores, founded in Longview in 1961, expanded rapidly after it became a shareholder-owned company in 1969. Managed by David Heerensperger, it was sold in 1987 after an abortive hostile takeover attempt. The deal left the firm deep in debt.
Heerensperger continued to operate the company but was replaced by Markley after sales fell from $398 million in 1987 to $244 million in 1988, Bell said.