Bankruptcy court OKs Phar-Mor financing

Drug Store News, Nov 5, 2001 by Liz Parks

YOUNGSTOWN, Ohio -- The U.S. Bankruptcy Court here has approved Phar-Mor's application for $135 million in debtor-in-possession financing from Fleet Retail Finance. John Ficarro, Phar-Mor's senior vice president and chief administrative officer, said Phar-Mor will use the financing, approved on Oct. 23, to fund day-to-day operations during its current restructuring program.

In addition, Phar-Mor in mid-October raised approximately $65.5 million in two separate auctions of its pharmacy files and its front-end and prescription inventories. The $65.5 million was "substantially more" than the $50 million the company initially expected, Ficarro said. The auction of the prescription files in 63 stores raised $23.5 million, while the sale of pharmacy inventories in those stores raised approximately $10 million.

Ficarro said a large number of retail operators successfully bid on the prescription files, including CVS, Eckerd, Target, Wal-Mart and Giant-Eagle.

Ficarro added that a second auction for front-end inventories in 64 stores raised approximately $32 million. Phar-Mor still has leases and fixed assets to liquidate. Ficarro said he could not estimate how much Phar-Mor may raise ultimately from the sale of these additional assets.

Overall, Phar-Mor liquidated the assets of 65 stores. Two of these stores did not have pharmacies, and one store, which sells closeout merchandise, is self-liquidating its inventory. The company continues to operate 74 stores under bankruptcy protection.

For the fourth quarter ended June 30, Phar-Mor reported a net loss of $44.5 million, or $4.13 per diluted share. This compared with a net loss of $13.1 million, or $1.19 per share. Sales for the 13-week period fell 7.9 percent to $290.3 million. Same-store sales were off 7.9 percent, despite a 4.7 percent increase in same-store pharmacy sales.

For the fiscal year, Phar-Mor had a net loss of $48.8 million, or $4.48 per share. This compared with a loss of $11 million for fiscal 2000. Sales fell 4 percent to $1.24 billion. At the front-end, comparable-store sales slipped 8.2 percent. Pharmacy comparable sales increased 5.6 percent.