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TROY, Mich. - Kmart Corp. on Friday announced it won't seek to increase its line of credit because its current financing is sufficient, The Associated Press reports.
Earlier this month, the bankrupt retailer said it was seeking permission to increase its line of credit by an amount not to exceed $500 million. Kmart's current $2 billion credit line is for 27 months, covering the retailer beyond its July 2003 target date for exiting Chapter 11 bankruptcy protection.
Al Koch, Kmart's chief financial officer, said Friday's announcement came after objections to the increase by its creditors committees.
"There were a couple that said 'you know, you don't really need the money and we're not really in support ... of an increase,'" Koch said.
Kmart said that its latest projections show that at the peak of its seasonal inventory buildup, it will have $1.1 billion in cash and available credit, allowing it to meet its post-bankruptcy obligations on time.
"Upon further analysis of the potential cost of expanding the DIP (debtor-in-possession) facility, particularly since we do not envision a need for the additional funds, we concluded that it would not be in the best interest of the company or our stakeholders to proceed further with the potential increase," said James Adamson, Kmart chairman and chief executive.