Kansas City, Mo. A last-minute deal with its main lender will keep Payless Cashways Inc. alive, but not without even more sacrifices from the struggling building supplies retailer.
The agreement, reached this week as the lender headed to bankruptcy court to put the company out of business, calls for New York-based Congress Financial Corp. to provide Payless a $160 million line of credit during the next year.
In exchange, Payless would grant Congress Financial a junior lien on all its real estate. Congress Financial already is secured by Payless' inventory and other assets.
Payless Cashways, based in the Kansas City suburb of Lee's Summit, Mo., also would close 42 more stores as part of its ongoing restructuring. The company had closed 15 outlets shortly before filing for Chapter 11 protection June 4.
Payless has a store in Lawrence. Its fate won't be known until a list of proposed closings is considered by the bankruptcy court, likely July 19, said Marla Holbert, a Payless spokesperson.
"It requires us to receive court approval," she said Tuesday. "We will not make any locations public until that is done and the associates in those locations are notified."
The court will consider approving the financing plan during the July 19 hearing.