Kmart Announces Management Changes As Company Prepares to Emerge From Chapter 11
Remaining Recipients of 2001 Special Retention Loans to Leave Company
Company to Request Repayment of all 2001 Special Retention Loans
TROY, Mich., Jan. 17 /PRNewswire-FirstCall/ -- Kmart Corporation (Pink Sheets: KMRTQ) today announced that the Company has severed employment relationships with all remaining executives who received special retention loans in 2001 under former Chairman and Chief Executive Officer Charles Conaway's tenure. These executives are Janet Kelley, Executive Vice President, General Counsel and Assistant Secretary; Mariana Keros, Vice President, Trend & Product Development; Douglas Meissner, Division President, Western Division; Paula Paquette, Senior Vice President, Hardlines and Home; and, Lee Viliborghi, Regional Vice President. This action was taken by the Company as it begins to implement a reorganized management structure and establish an emergence management team in anticipation of its emergence from Chapter 11 reorganization on or about April 30, 2003.
Commenting on behalf of the Kmart Board, Chairman James B. Adamson said, "While these five individuals have independently made substantial contributions to Kmart, the Company felt it was important to put the controversy surrounding employees involved in the special retention loans behind it as the Company prepares to emerge from Chapter 11. We are confident that there will be an orderly transition and will now focus our efforts on establishing an emergence management team that will lead Kmart beyond its Chapter 11 cases and implement the five-year business plan approved by the Board earlier this week and which will be publicly filed in our Disclosure Statement and Plan of Reorganization on or about January 24, 2003."
Successors to these executives will be named in due course.
In a related action, Kmart said that it was making written demand on all recipients of the 2001 special retention loans to repay the loans to the Company. Kmart said that the stewardship review undertaken by the Audit Committee of the Board of Directors, with the participation and cooperation of the statutory committees appointed in the Company's Chapter 11 case, had developed credible and persuasive evidence that the 2001 special loan program had been established without appropriate disclosure of material information to the Board of Directors by former members of executive management. The Company said that it expected to include information regarding the stewardship review in the Disclosure Statement that is currently scheduled to be filed with the Bankruptcy Court on or about January 24, 2003.
Kmart Corporation is a mass merchandising company that serves America through its Kmart and Kmart SuperCenter retail outlets. The Company's common stock is currently quoted on the Pink Sheets Electronic Quotation Service (www.pinksheets.com ) under the symbol KMRTQ.
Cautionary Statement Regarding Forward-Looking Information
Statements made by Kmart which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements. Such forward-looking statements are and will be, as the case may be, subject to many risks and uncertainties, including, but not limited to, Kmart's having filed for bankruptcy and factors relating to Kmart's operations and the business environment in which Kmart operates, which may cause the actual results of Kmart to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include those set forth in Kmart's Annual Report on Form 10-K/A for the fiscal year ended January 30, 2002, Kmart's Quarterly Report on Form 10-Q for the fiscal quarter ended October 30, 2002, or in other filings made, from time to time, by Kmart with the Securities and Exchange Commission (the "Company Filings"). The forward-looking statements speak only as of the date when made and Kmart does not undertake to update such statements.
Similarly, these and other factors, including the terms of any reorganization plan ultimately confirmed, can affect the value of our various pre-petition liabilities, common stock and/or other equity securities. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these constituencies.
A plan of reorganization could result in holders of Kmart common stock receiving no distribution on account of their interest and cancellation of their interests. As described in the Company's Quarterly Report on Form 10-Q, holders of Kmart common stock should assume that they could receive little or no value as part of a plan of reorganization. In addition, under certain conditions specified in the Bankruptcy Code, a plan of reorganization may be confirmed notwithstanding its rejection by an impaired class of creditors or equity holders and notwithstanding the fact that equity holders do not receive or retain property on account of their equity interests under the plan. In light of the foregoing, the Company considers the value of the common stock to be highly speculative and cautions equity holders that the stock may ultimately be determined to have no value.
Accordingly, the Company urges that appropriate caution be exercised with respect to existing and future investments in Kmart common stock or any claims relating to pre-petition liabilities and/or other Kmart securities.
SOURCE: Kmart Corporation
CONTACT: Kmart Media Relations, +1-248-463-1021
Web site: http://www.kmart.com/