Target Corporation (NYSE:TGT) announced that Target Canada Co. (“Target Canada”) has obtained an Initial Order from the Ontario Superior Court of Justice (Commercial List) (the “Court”) for creditor protection under the Companies' Creditors Arrangement Act ("CCAA") earlier this morning.
The Initial Order authorizes Target Canada to begin a court-supervised wind-down of its Canadian businesses. It also provides for a broad stay of proceedings against Target Canada and authorizes Target Corporation to provide a debtor-in-possession credit facility of US$175 million to finance Target Canada’s operations during the CCAA proceedings.
Under the terms of the Initial Order, Alvarez & Marsal will serve as the Court-appointed Monitor of Target Canada. Aaron Alt, most recently Target Corporation’s senior vice president and Treasurer, has been named Chief Executive Officer of Target Canada to execute the wind-down process under the supervision of the Monitor and the Court. Target Canada stores will remain open during the liquidation process.
The Court also approved a C$70 million (approximately US$59 million) Employee Trust for the benefit of employees of Target Canada. This trust will help ensure fair treatment of
Target Canada’s 17,600 employees during the wind-down. The Initial Order also appointed representative counsel for Target Canada employees in the CCAA proceedings. In addition, the Court also approved the engagement of Lazard who will advise Target Canada on the sale of its real estate portfolio.
“We do not take lightly the impact that our decision to discontinue operations in Canada will have on Target Canada’s team members who have worked tirelessly to make improvements to the guest experience. That is why we took the unique step of establishing the Employee Trust,” said Brian Cornell, Target Corporation Chairman and CEO. “While this is a difficult decision, we believe it is the right one for Target. We had great expectations for Canada but our early missteps proved too difficult to overcome.”
Target Corporation has filed a Form 8-K, which details the financial implications of this decision.
Cornell and John Mulligan, Target Corporation’s Chief Financial Officer, will discuss this announcement at 10:30 a.m. CST today. Investors and the media are invited to listen to the call through the Company’s website at www.target.com/investors (click on “Upcoming Events and Presentations”). A telephone replay of the call will be available beginning at approximately 1:15 p.m. CST today through the end of business on January 19, 2015. The replay number is 855-859-2056 (passcode: 67843091).
Additional information regarding Target Canada’s CCAA proceedings will be available on the Monitor’s website at www.alvarezandmarsal.com/targetcanada.
Minneapolis-based Target Corporation (NYSE: TGT) serves guests at 1,801 in the United States and at Target.com. Since 1946, Target has given 5 percent of its profit to communities, that giving equals more than $4 million a week. For more information, visit Target.com/Pressroom. For a behind-the-scenes look at Target, visit ABullseyeView.com or follow @TargetNews on Twitter.