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NATIONAL CONVENIENCE STORES ELECTS NOT TO PAY ON MORTGAGE DEBT

     NATIONAL CONVENIENCE STORES ELECTS NOT TO PAY ON MORTGAGE DEBT
    HOUSTON, Dec. 5 /PRNewswire/ -- National Convenience Stores Incorporated (NYSE: NCS) announced that it has decided not to pay approximately $1.3 million in principal and interest due Dec. 1, 1991, in respect of approximately $27.4 million in mortgage debt secured by certain of the company's real estate assets.  The company intends to seek an arrangement with the holders of such mortgage debt permitting the deferral, at least through the end of fiscal 1992, of principal and interest coming due on such obligations; however, no assurance can be given that the company will be successful in reaching any such arrangement.  Unless and until such an arrangement is reached or the company is able to cure the default resulting from such nonpayment, the company will remain in default under the terms of such mortgage debt, which also constitutes an event of default under its bank debt and certain other obligations.
    So long as an event of default exists in the payment of the company's mortgage debt, bank debt or other senior indebtedness, the company is prohibited from making any payments of principal or interest on its subordinated debt obligations.  Accordingly, the company will not make the interest payment due December 1, 1991, of approximately $807,000, on its 9 percent convertible subordinated debentures due December 1, 2008.  Unless the defaults in senior indebtedness have been cured, the company also will be prohibited from making the Feb. 15, 1992, interest payment of approximately $2.5 million on its 12-1/2 percent senior subordinated debentures due Aug. 15, 1996.
    As a result of the above defaults, the company will be required to reclassify approximately $170.7 million of its long-term debt as a current liability until such defaults are cured.  In addition, the company could be required to cash collateralize letters of credit totalling $29.8 million.
    V.H. Van Horn, president and chief executive officer of the company, stated that, "The company continues its previously announced efforts to defer an aggregate of approximately $6.4 million scheduled for payment on its bank debt within the next 60 days and to effect sale and leaseback transactions with respect to certain nonstore assets, but we have not yet concluded any agreements with respect to such proposed transactions.  We continue to need positive results from these efforts in order to help fill the previously announced $6 to $10 million liquidity shortfall the company foresees during its seasonally slow winter period.  We decided that today's announced suspension of certain principal and interest payments was a necessary step in seeking to preserve the company's cash position, which we believe to be essential to our efforts to maintain our relationships with suppliers and the substantial and necessary vendor credit which they provide."
    National Convenience Stores Incorporated operates 986 Stop N Go stores in Texas, California and Georgia and is the leading convenience store operator in both Houston and San Antonio, Texas.
    -0-         12/5/91
    /CONTACT:  J.C. Brewster of National Convenience Stores, 713-863-2404/
    (NCS) CO:  National Convenience Stores Incorporated ST:  Texas IN:  REA SU: SH -- NY043 -- 9616 12/05/91 11:02 EST
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Publication:PR Newswire
Date:Dec 5, 1991
Words:526
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