Contact: Barry Brockwell
804-784-7560
Sitrick And Company
Ann Julsen
Brenda Adrian
310-788-2850
Heilig-Meyers Wins Approval of New Credit Program;
Court Approves Liquidation Plan for Closing Stores
Richmond, VA - September 12, 2000 - Heilig-Meyers Company
(OTCBB:HMYRQ) announced today that it has received Court approval for its
program to outsource its customer credit program. Today's Court decision clears
the way for the first major step towards the reorganization of the nation's
largest furniture chain. The Company has finalized interim agreements with
Household Financial, who will serve as the primary credit provider, together
with a series of secondary providers. The Company expects to finalize a long-
term agreement with Household Financial within the next 60 days.
"We are extremely pleased with the outcome of today's hearing and
expect the implementation of this new program, in our on-going stores, to be
completed over the next two weeks. While Heilig-Meyers has been running its own
in-house program for over 80 years, increased costs, including funding cost,
portfolio risk and administration does not allow for an adequate return on the
capital required to sustain the program in its historical manner," said Donald
S. Shaffer, Chief Executive Officer. "Additionally the elimination of these
costs and the absence of the need to fund the receivables should dramatically
improve our liquidity situation going forward," said Mr. Shaffer.
The Company said that the combination of a third party provider with a
series of secondary providers should allow the Company to maximize sales
opportunities in its ongoing Heilig-Meyers stores. "The credit extension
process at the time of sale should be dramatically enhanced with the combination
of these third party providers in place. Ultimately it will be a seamless
process and entirely system driven much like the direction we were heading in
the Las Vegas and St. Louis test markets," said Mr. Shaffer. Normalized
revenues per store will likely be lower under the outsourcing arrangement,
however the sales given up through this arrangement would primarily be those
that were unprofitable under the in-house program due to customer delinquency,
defaults and high collection costs.
"The new credit programs not only benefit the Company financially,
they also increase our ability to attract a broader base of customers through
the offering of a wider array of financing options that were not available under
our in-house program. In our Las Vegas and St. Louis test markets customer
response has been favorable to these credit alternatives," added Mr. Shaffer.
Household/BCS has been the primary credit provider for the Company's
54 RoomStores since 1998. The positive customer response to this program is a
good indicator that the new credit program will be successful in the Heilig-
Meyers stores. The current RoomStores program will not be impacted by the new
Heilig-Meyers credit arrangement.
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The Court also approved the Company's proposed liquidation program.
The Company has entered into an agreement with Great American Group, Gordon
Brothers Retail Partners, LLC and The Nassi Group, LLC to conduct liquidation
sales in the stores that the Company has identified for closing. The closing
sales will begin within the next week and are scheduled to take 45 to 60 days to
complete.
The Company also announced that as a result of the retention of
McGuireWoods LLP as special counsel to Heilig-Meyers during the bankruptcy
proceedings, Robert L. Burrus, Jr. Chairman of McGuire Woods has resigned from
the Heilig-Meyers Board of Directors.
The Company filed Chapter 11 petitions in the U.S. Bankruptcy Court for the
Eastern District of Virginia in Richmond for Heilig-Meyers Company, Inc., on
August 16, 2000.
Heilig-Meyers is the nation's largest retail chain selling home furnishings
and related items. Customers may visit the Company's retail web sites at
www.heiligmeyers.com and www.roomstore.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: The forward-looking statement made above and identified by the words
"expect," "should," "would" and "will" reflect the Company's reasonable
judgments with respect to future events and are subject to risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements. Such factors include but are not limited to,
the customer's willingness, need and financial ability to purchase home
furnishings and related items, the costs and effectiveness of promotional
activities, the Company's ability to obtain final court approval for, and the
impact from, debtor-in-possession financing, the impact from outsourcing credit
operations, and lowering overhead and infrastructure costs. The Company's
ability to obtain court approval for making payments relating to certain ongoing
operating activities may also impact the outcome of the forward looking
statements. Other factors such as changes in tax laws, recessionary or
expansive trends in the Company's markets, inflation rates and regulations and
laws which affect the Company's ability to do business in its markets may also
impact the outcome of the forward-looking statements.
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