Leading General Merchandise Distributor BMK Inc. Files Chapter 11 to Reorganize U.S. Operations; Filing Should Not Impact Customers, Employees or Operations.

Business Editors

CITY OF COMMERCE, Calif.--(BUSINESS WIRE)--Dec. 4, 2001

BMK Inc., a leading distributor of merchandise from cosmetics to pet supplies to many of the nation's top supermarkets and drugstores, today said that it has filed a voluntary petition for reorganization of its U.S. operations under Chapter 11 of the Bankruptcy Code to facilitate a restructuring of the Company.

BMK also said that it has retained the respected financial advisory firm of Houlihan Lokey Howard & Zukin Capital of Los Angeles to assist in finding the right financial alternatives.

"We are looking for a partner who understands and is willing to invest in our business and believes in its potential," said Richard Craig, chief executive officer of BMK, which last year had revenues of approximately $400 million. "This is a great company with an excellent employee base and an outstanding customer base."

Mr. Craig said that BMK is and has been profitable on an operating basis, but that the Company's debt load and a soft economy have had a negative impact on earnings. "This has necessitated the restructuring of our balance sheet," he said.

Mr. Craig said that over the past 90-120 days, the Company has made significant improvements to its business. "We have cut annual operating costs by some $12 million by reducing our workforce, consolidating facilities, cutting freight costs and improving inventory turnover. I am confident that, with a restructured balance sheet and the right capital structure, we will have an exciting future," he said.

Mr. Craig said that neither customers, vendors nor employees should notice any difference in the Company's operations during the Chapter 11 process.

"The Chapter 11 proceeding should have virtually no impact on daily operations," he said. "Our facilities will remain open, and transactions will proceed in the ordinary course of business. Our customers can be assured there will be no interruption in the supply of merchandise. Vendors can be assured that they will be paid for all post-petition goods and services. Employees are expected to be paid as they always have."

To ensure that customer and vendor relationships remain intact during the process, BMK said it has received commitments for approximately $9.4 million in debtor-in-possession (DIP) financing from a bank group agented by Heller Financial Inc. of Chicago, a GE company.

The Company filed its Chapter 11 petition in the U.S. Bankruptcy Court for the Central District of California in Los Angeles. The Company's lead legal bankruptcy counsel is Peitzman Glassman & Weg, LLP of Los Angeles. Corporate turnaround specialist The Scotland Group, Inc. of Newport Beach, California, is assisting management in reorienting the Company.

About BMK Inc.

BMK is the nation's largest full-service distributor of general merchandise, serving 44 states and most major grocery and drug chains in the United States. Its U.S. operations are comprised of three divisions. The Western operations do business primarily as The Berton Company and Advantage Merchandising, both of California, and Wasatch Service & Supply of Utah. BMK's Central U.S. operations, which also serve East Coast customers, primarily conduct business as Nationmark Merchandising & Distribution of Texas, Jacks Service Company of Oklahoma and M.W. Kasch of Wisconsin. The West and Central U.S. operations focus on general merchandise. BMK's Somody subsidiary in southern Minnesota focuses on specialty products. Nationwide, the company has approximately 1,900 full-time and 500 part-time employees. BMK also has a Hong Kong affiliate, Excite, Limited, that is excluded from the Chapter 11 filing.