Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, March 22, 1990 TAG: 9003222661
SECTION: NATIONAL/INTERNATIONAL PAGE: A/1 EDITION: EVENING
SOURCE: Associated Press
DATELINE: DALLAS LENGTH: Medium
Ito-Yokado Co. Ltd., Japan's second-largest supermarket operator, and longtime Southland affiliate 7-Eleven Japan, which Ito-Yokado controls, would take three-quarters of Southland's common stock under the deal, Southland said in a statement.
The Japanese companies would pay $400 million in cash, and additional money for the acquisition would be raised through a restructuring of Southland's outstanding $1.8 billion debt, the statement said.
Southland spokeswoman Cecilia Norwood said the total acquisition cost was not yet known, but the leading Japanese financial journal Nihon Keizai Shimbun today estimated the deal would be worth about $1 billion.
Also part of the deal are Southland Foods Division's six food stores. Independent licensees and affiliates also operate more than 5,900 7-Eleven stores in the United States and 21 foreign countries.
7-Eleven Japan, the largest convenience-store operator in Japan, operates 3,940 licensed stores. Ito-Yokado, which Southland described as Japan's most profitable supermarket chain, owns 50.3 percent of 7-Eleven Japan.
Suffering disappointing sales and earnings growth, Southland has been strained by debt associated with its $4.9 billion leveraged buyout in 1987, which gave Dallas' Thompson family control of the chain.
The company announced in November it faced a liquidity crisis.
To meet substantial debt payments last year, the company sold off its half-ownership of Citgo Petroleum Corp., which supplies many of its stores with gasoline.
Southland's bank group has ordered the company to submit a restructuring plan by May 31.
"During the course of the last six months, we have reviewed a broad range of alternatives that would maintain the long-term viability and success of Southland," said John Thompson, Southland's chairman.
"We believe this strategic alliance . . . is the best way to achieve the company's goals."
Another Southland spokesman, Harris Diamond, said the Japanese firm will be represented on the Southland board of directors if the deal is completed.
The Thompson family would retain about 15 percent of the company and would remain on the board, the spokesman said.
"There will be no layoffs, and no store closings," Diamond said. "In fact, we believe the $400 million cash infusion is going to be a tremendous asset."
by CNB