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 user 2008-11-12 at 3:14:07 pm Views: 59
  • #20725
    Circuit City’s troubles hit Lexmark
    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

    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

    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.”.

    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.