URGENT Revco Files For Chapter 11 Bankruptcy
TWINSBURG, Ohio (AP) _ Drug store giant Revco D.S. Inc. said today it filed for protection from its creditors under Chapter 11 of the federal bankruptcy code.
The filing includes Revco D.S., its parent company, ANAC Holding Co., and most of its subsidiary corporations. Revco said Insta-Care Pharmacy Services is not included in the filing.
Boake A. Sells, chairman and chief executive officer, said Revco’s 2,000 drugstores in 27 states will remain open and the company’s 28,000 employees will continue to be employed.
″Revco is in business to stay,″ Sells said. ″The stores are open, employees have jobs and are being paid and customers can get prescriptions filled as always.
″Although we had hoped to avoid this filing and restructure our finances outside of the courts, we had warned of the possibility of a voluntary filing for several months. Events of the last few days left us with no viable alternative. This is a fight about who owns Revco, not how Revco operates,″ Sells said.
Revco was taken private in a leveraged buyout in late 1986. In a leveraged buyout, those making the acquisition usually borrow heavily against the cash flow or assets of the company being acquired.
The bankruptcy filing was necessary because holders of about $400 million of the company’s high-yielding bonds demanded immediate payment of principal and $46 million in interest that the company failed to pay as scheduled June 15, said Kathleen Obert, Revco spokeswoman.
She said under terms of the subordinated bonds, payment of the principal is prohibited until the company’s debt to senior lenders is paid.
Revco’s total debt is about $1.5 billion and Obert said the company filed for bankruptcy to be able to continue company operations.
″The senior banks are saying you have to give us the debt first and the subordinated want it first,″ Ms. Obert said. ″This is not a liquidating bankruptcy, the stores are open and the normal business operations are intact.″
The filing allows Revco to obtain new credit and invoices for goods and services, and requires the company to submit a reorganization plan, restructuring the company’s debt, to the court, Obert said.
With annual sales of $2.3 billion and 2,000 outlets, Revco operates the nation’s largest drug store chain, filling more than 65 million prescriptions each year.