CIRCUIT CITY's TROUBLES HIT LEXMARK

[Anonymous]

http://www.kentucky.com/101/story/587809.html
Circuit City’s troubles hit Lexmark
Circuit
City, the nation’s second-biggest electronics retailer, filed for
bankruptcy protection Monday, just a week after it announced it would
close 20 percent of its stores and lay off more than 7,000
workers.”Without immediate relief, the company is concerned that it
will not receive goods for Black Friday and the upcoming holiday
season, which could cause irreparable harm to the company and its
stakeholders,” Chief Financial Officer Bruce H. Besanko said in the
filing.

The company is hoping to exit court protection by early
summer 2009, putting it in a position to find a buyer for the chain or
operate as a standalone business.Its shares fell 14 cents, or about 56
percent, to 11 cents Monday before being halted.The announcement is a
blow to Lexington-based printer maker Lexmark International, which has
partnered this year with the chain to pitch its wireless inkjet
printers.

Lexmark is also among Circuit City’s top 50 creditors,
according to the filing, and is owed nearly $3 million. Circuit City’s
largest creditor is Hewlett-Packard at $118.8 million.”It’s a big
difficulty for Lexmark in terms of their inkjet printer business,” said
Larry Jamieson of printer industry tracker Lyra Research. “Circuit
City’s not doing anything with lasers, so that’s the good
news.”Jamieson said if Circuit City closes its underperforming stores
and emerges as a stronger company “it might not be so bad for Lexmark.”.

Circuit
City has had only one profitable quarter in the past year. It’s faced
significant declines in traffic and heightened competition from rival
Best Buy Co. and others.While the retail industry overall is facing
what’s expected to be the weakest holiday season in decades, Circuit
City’s struggles have intensified as nervous consumers spend less and
credit has become tighter.

U.S. Bankruptcy Judge Kevin
Huennekens granted Circuit City interim approval to secure $1.1 billion
in debtor-in-possession loans while it is in bankruptcy protection.
Those funds, needed to stock merchandise and pay employees, replace a
$1.3 billion asset-backed loan the company had been using.Final
approval of the motions will be addressed at a Dec. 5 hearing in
Richmond, Va.

[Author]

November 12, 2008 at 3:14 PM