Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 9, 1990 TAG: 9003091773
SECTION: BUSINESS PAGE: B5 EDITION: STATE
SOURCE: The New York Times
DATELINE: LENGTH: Medium
The troubled Canadian company said Thursday it had defaulted on $5.2 million in interest payments to two lenders, risking the loss of sizable assets in both Canada and the United States.
The interest payments, which are due monthly, were not paid Wednesday after being deferred from Feb. 28.
Campeau, the Toronto-based parent of Federated Department Stores and Allied Stores, said it was not able to pay the interest, which it said "constitutes an event of default under the loans."
The loans involved are $255 million from Olympia & York Developments Ltd. and $480 million from the Edward J. DeBartolo Corp.
Both companies are leading real estate developers.
Campeau said both lenders agreed in January they would not act to seize any collateral for the loans without first giving Campeau nine days' notice.
While both Federated and Allied are in Chapter 11 bankruptcy proceedings in the United States, Campeau itself is not involved.
But analysts said Thursday cash flow to Campeau since the subsidiaries' bankruptcy filing has dwindled.
If DeBartolo moves to seize the collateralized assets, it could obtain about 70 percent of the common stock of Ralphs Supermarkets, a large California food chain, and 50 percent of its joint-venture ownership of five large American regional shopping centers.
Olympia & York, if it seizes Campeau assets, could obtain ownership of several Campeau office buildings in Canada.
Federated and Allied operate nine American store divisions, including Bloomingdale's, Abraham & Straus and Stern's in the New York area; Jordan Marsh, in New England; Burdines and Maas/Jordan Marsh, in Florida; Rich's/Goldsmith's, in Atlanta; Lazarus, in Cincinnati; and the Bon Marche, in Seattle.
Richard W. Wertheim, a spokesman for Campeau in Toronto, said the company has the funds to pay the monthly interest.
But he said Campeau was trying to develop a long-range business plan for the company with both DeBartolo and Olympia & York, which could include debt restructuring and asset sales.
by CNB