Circuit City boosts NYC presence: Tops and Nobody Beats the Wiz challenged by competition

Discount Store News, Dec 8, 1997

With annual sales of around $1 billion, The Wiz has a total of $398 million worth of debt, including $227 million in secured debt and $171 million of unsecured debt, Burian said.

In a move toward greater liquidity, the Jemal family, which owns The Wiz, last month sold a 30% stake to B-III and Paragon Partners. The new part-owners have partial consent rights over management actions. Burian declined to disclose the price paid for the equity stake.

In addition to investing capital, Paragon Partners also extended last month $27 million in additional revolving credit, Burian said. The Wiz already has tapped most of it, but it expects the line to be increased.

In the face of a weak CE market since mid-1994, The Wiz had been strong, Burian said. With cooperation from all key constituencies, there is no reason for The Wiz to file Chapter 11 bankruptcy, he added.

In late October, six key vendors helped The Wiz dodge a potential Chapter 11 bullet by agreeing to a standstill in bills owed prior to Oct. 29. In return, the six got an agreement that bills submitted after that date would be paid promptly.

The six are: Sony, (both electronics and music), Hewlett Packard, Minolta, Sharp, Panasonic and Thomson Electronic (RCA). They formed an unofficial trade creditors committee and retained Paul Straub to represent them.

Straub declined to comment on the Gold Star lawsuit and refused to say how much The Wiz owes the six, more patient creditors.

The standstill agreement ends Dec. 16, after which the creditors may either renegotiate the deal or demand payment for the unpaid bills.