At 79, Albert Boscov is saving his company. He’s saving 39 department stores from bankruptcy, saving his family’s name and, most importantly, he’s saving 9,000 people from the ever-growing reality of unemployment. Albert believes he can do it, and so does GE Capital, which along with a consortium of individuals, banks and federal lenders, is helping secure the nearly $300 million needed to get the job done.
Four years ago, Albert Boscov retired as chairman and CEO of the Pennsylvania-based department store chain, Boscov’s. Since then, the company his father founded in 1911, fell into bankruptcy.
Boscov’s wasn’t alone in dire circumstances. The retail industry has been one of the hardest hit in the economic downturn. In January, 54,000 jobs were sliced and major players like Circuit City and regional retailers such as Mervyn’s and Goody’s have filed for bankruptcy.
“I apologize to everyone,” Albert says. “For the 45 years I ran the business, we paid all our bills on time. We took care of our finances. Even though I wasn’t involved for the last four years, I’m embarrassed.”
In December, Albert returned to his post as chairman and CEO, determined to keep his family’s business and its employees from ending up in a pile of economic statistics.
“It didn’t make much sense to see people lose their jobs,” he says.
As part of the consortium providing financing, GE, which was the largest lender to U.S. companies in bankruptcy last year, is lending $50 million. The Boscov family is contributing $23 million.
“We did a lot of the lead negotiations,” says Tim Tobin, a Managing Director of Retail Finance for GE Capital. “We also had very recent experience on the retail bankruptcy side that helped with the other banks. We like to think that we added value during the process.”
Tobin, who has worked over 20 bankruptcy filings in the last eight years, admits there’s a lot of risk in the market. But he says his primary responsibility is to GE shareholders and Boscov’s shows there are still good financings to be made.
Many times in retail bankruptcy, clients are in denial, Tobin says. Not Boscov.
“He understands there were problems with the company,” Tobin says. “But he believes he can make a profitable business out of this. To do what he’s done, even in a good economy, would be tough.”
In December, Boscov’s reported its highest sales in the company’s 98-year history, according to Albert.
“It’s all about relationships and integrity,” Tobin says. “People know Al and stood by him. Over the years he’s been very community involved. That came back to save him. It’s the best investment he’s made.”
For Albert, the proudest moment of the process has been lining up the needed financing, which will be finalized following approvals from Pennsylvania county officials involved in the deal.
“The difficulty in this market is that banks are very nervous about retailing and lending,” he says. “The exciting moment was knowing that we were going to continue to exist. There’s no reason for us to fail. And we’re not going to.”
By Vivek Kemp, GE Reporter at Large
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