Footstar, Inc. has confirmed that the U.S. Bankruptcy Court has approved the sale of approximately 350 Footaction stores to Foot Locker, Inc. for $225 million in cash, subject to certain closing adjustments and regulatory approvals. The sale will enable Footstar to focus its full attention and resources on its core Meldisco business as it moves forward with its Chapter 11 reorganization.
Footstar has also entered into agreements to assign 15 Just For Feet leases to third parties resulting in approximately $750,000 in net cash proceeds to the company and the avoidance of approximately $5 million of bankruptcy rejection claims related to these leases.
As previously reported, Foot Locker signed an agreement to purchase approximately 350 stores for $160 million in cash. Foot Locker increased its offer to $225 million in response to competing bids from other suitors. The remaining terms of Foot Locker's agreement with Footstar remain substantially unchanged.
The transaction is expected to close in the second quarter of 2004 and a hearing is scheduled for April 26, 2004 to approve the assignment and assumption agreements related to the sale.
“We are very pleased that the Bankruptcy Court approved our offer for the Footaction stores,” said Matthew D. Serra, Foot Locker Inc.'s Chairman and Chief Executive Officer. “We now look forward to working with the management of Footstar to expedite the closing of the transaction. We are quite disciplined with the use of our cash resources and we believe that this acquisition makes good strategic sense for our Company and for our shareholders. Due to our strong financial position, we expect the proposed acquisition to be initially funded from cash and be accretive to Foot Locker's fully diluted earnings per share within the first full year of operation.”
Dale W. Hilpert, Chairman, President and Chief Executive Officer, commented, “We are pleased that this transaction reflects an increased offer due to an active bidding process. As a result, we have been able to maximize the value for our stakeholders while also providing for continued employment of substantially all Footaction store employees as well as employment opportunities for other Footaction associates. We look forward to working with Foot Locker on a smooth transition.”
