Court Approves Sale of Lamonts' Store Assets to Gottschalks for $21.8 Million; Buyer Will Acquire 37 Store Leases.

Business Editors

KIRKLAND, Wash.--(BUSINESS WIRE)--May 16, 2000

The U.S. Bankruptcy Court for the Western District of Washington in Seattle today approved the sale of 37 of the 38 store leases, fixtures, and equipment of Lamonts Apparel Inc. (OTC:LMNTE) to Gottschalks Inc. (NYSE:GOT), a regional department store chain that operates 42 department stores and 20 specialty apparel stores in the West and Northwest. The committee representing Lamonts' unsecured creditors unanimously supported the sale to Gottschalks, as did representatives of a number of landlords of affected leases.

Under the agreement, Gottschalks will acquire all but one of of Lamonts' store leases. Gottschalks will also offer employment to substantially all of Lamonts' store employees and managers and provide COBRA benefits to severed corporate employees. In a separate transaction, the store lease for the Alderwood Mall site in Lynnwood, Wash., will be sold to the landlord.

The final sale price for Lamonts' real estate assets totaled $21.8 million, significantly above the $19 million negotiated in the April 24 asset purchase agreement reached between Lamonts and Gottschalks Inc. Because Lamonts is operating under Chapter 11, all such agreements are subject to Court approval and an overbid process. The Court today ruled that a competing bid from Alamo Group LLC/Troutman Investment Co., which are California- and Oregon-based companies, respectively, that joined together for the bidding process, did not meet overbid procedure requirements set by the Court, and the Court subsequently approved the sale to Gottschalks.

"We are very pleased that the proposed real estate asset sale will go through to Gottschalks and are especially pleased that the bidding process resulted in a higher valuation for the benefit of Lamonts' creditors," stated Alan R. Schlesinger, Lamonts chairman of the board. "We believe the sale is the right solution for our company, customers and store employees, who will have an opportunity to shop and work with a long-established and respected retailer."

The sale does not include the liquidation of Lamonts' store inventories, which are now being sold. The liquidation sales, which are under the direction of the Gordon Brothers Group and the Nassi Group, began May 10 and will continue until mid-July or inventories are depleted, whichever occurs first. Lamonts expects to transfer ownership of the store leases on or about July 24 to Gottschalks, which expects to operate stores by Sept. 1.

Proceeds from the sale of the stores and the inventories will become part of the Lamonts estate to satisfy creditor claims. Creditor recovery is currently estimated at a range of 40% to 50%. The company hopes to complete the Chapter 11 proceedings by year end.

Founded in 1967, Lamonts Apparel Inc. operates 38 stores in Alaska, Idaho, Oregon, Utah and Washington. The company is headquartered in Kirkland, Wash., employs approximately 1,500 people, and has annual sales of approximately $210 million. The company voluntarily filed to reorganize under Chapter 11 on Jan. 4, 2000.

Founded in 1904, Gottschalks Inc. is a regional department store chain based in Fresno, Calif., with annual sales including leased departments of approximately $568 million. The company operates 42 Gottschalks and Harris/Gottschalks department and 20 specialty apparel stores in California, Nevada, Oregon, and Washington. The chain offers moderate to better brand-name fashion apparel, cosmetics, shoes, accessories and home merchandise.

Statements in this press release containing the words "believes," "anticipates," "expects," and words of similar import, and any other statements which may be construed as a prediction of future performance or events, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the company, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, (i) national and local general economic and market conditions, (ii) demographic changes, (iii) liability and other claims asserted against the company, (iv) competition, (v) the loss of a significant number of customers or suppliers, (vi) fluctuations in operating results, (vii) changes in business strategy or development plans, (viii) business disruptions, (ix) the ability to attract and retain qualified personnel, (x) ownership of the company's common stock, (xi) volatility of the company's stock price, (xii) delays on the part of the company or suppliers or other third parties in achieving year 2000 compliance, (xiii) the company's ability to conclude its voluntary reorganization proceedings, and (xiv) the additional risk factors identified in the company's Annual Report on Form 10-K for the fiscal year ended Jan. 30, 1999 and the company's Registration Statement on Form S-1 (No. 333-44311) initially filed with the SEC on Jan. 15, 1998 (and most recently amended on Oct. 29, 1999), and those described from time to time in the company's other filings with the SEC, press releases and other communications. The company disclaims any obligations to update any such factors or to announce publicly the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.