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 MILWAUKEE, Aug. 11 /PRNewswire/ -- Value Merchants, Inc. (NYSE: VMI) announced today that it closed on a new two-year, $60 million credit facility to refinance the company's existing debt and provide for its on-going working capital needs, according to Steven J. Appel, president and chief executive officer.
 "This is an extremely important achievement for our company. It gives us the opportunity to replenish our current inventory and begin building our inventory for the all important Christmas selling season," Appel said. "This new facility increases our seasonal working capital capabilities by over $20 million. It brings to an end an extended period of credit constraints which resulted in an imbalance in our merchandise assortment that crippled retail sales, negatively impacted our earnings in fiscal 1992 and for the first six months of fiscal 1993, and challenged the company's relationships with its banks, vendors, landlords, various creditors, noteholders and shareholders.
 "We are especially appreciative to the many vendors, lenders, landlords and other creditors who gave us their overwhelming support in helping us to meet the conditions necessary to obtain this new credit facility. Our banks gave us a great deal of cooperation by extending our line of credit several times as we pursued a new credit facility, and these banks are now participating in the new credit facility," he said. "Additionally, our employees throughout the country have demonstrated their strong commitment by persevering through this period of uncertainty."
 According to Appel, Value Merchants noteholders also provided important support. Holders of about 92 percent in principal amount of the company's 11 percent Subordinated Notes consented to reduce the minimum consolidated net worth required to be maintained by the company either by tendering their 11 percent Subordinated Notes in exchange for the company's newly authorized 9 percent Convertible Notes or by electing to retain their Subordinated Notes and providing their consent to the reduction. "We are pleased that a large majority of our noteholders expressed their belief in the future of Value Merchants by choosing to exchange their current 11 percent notes for 9 percent convertible notes," Appel said.
 The Exchange Offer and Consent Solicitation is scheduled to expire Aug. 16, 1993, unless extended.
 Appel listed a number of actions the company has recently taken or plans to take to improve its financial results, including:
 -- Dramatically limiting store growth which will reduce pre-opening store amortization costs to an estimated level of less than half the fiscal 1992 amount.
 -- Consolidating the Toy Division distribution center operations from Tracy, Calif., to current facilities in Indianapolis.
 -- Continuing to close unprofitable stores, in addition to the 22 Toy Liquidators stores closed since January of this year which were operating at a loss or nominal profit in 1992.
 -- Reducing both operating division store expenses and operating division general and administration expenses as a percent of sales.
 -- Cutting corporate overhead expenses both in absolute dollars, by an estimated 20 percent, and as a percent of sales.
 -- Developing and implementing a domestic and international franchising program for Everything's $1.00.
 The operations of Value Merchants, Inc. include 418 Everything's $1.00 close-out variety stores and 117 Toy Liquidators close-out toy stores. Additionally, the company operates the nation's largest wholesaler of close-out toys.
 -0- 8/11/93
 /CONTACT: Gary I. Kastel, director of communication, Value Merchants, Inc., 414-274-2976/

CO: Value Merchants, Inc. ST: Wisconsin IN: REA SU: FNC

KL -- CL020 -- 1860 08/11/93 16:49 EDT
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Publication:PR Newswire
Date:Aug 11, 1993

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