ccs012309_8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event
reported): January 16, 2009
___________
CIRCUIT
CITY STORES, INC.
(Exact
name of registrant as specified in its charter)
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Virginia
(State
or other jurisdiction
of
incorporation)
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1-5767
(Commission
File Number)
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54-0493875
(I.R.S.
Employer
Identification
No.)
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9950
Mayland Drive
Richmond,
Virginia
(Address
of principal executive offices)
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23233
(Zip
Code)
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Registrant’s
telephone number, including area code: (804) 486-4000
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01
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Entry
into a Material Definitive
Agreement.
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On
January 16, 2009, the United States Bankruptcy Court for the Eastern District of
Virginia, which has jurisdiction over the reorganization proceedings under
Chapter 11 of the United States Bankruptcy Code for Circuit City Stores, Inc.
(the “Company”) and each of its wholly-owned United States and Puerto Rican
subsidiaries, entered on its docket an order (the “Order”) granting approval of
the Agency Agreement by and between Great American Group WF, LLC, Hudson Capital
Partners, LLC, SB Capital Group, LLC and Tiger Capital Group, LLC (collectively,
the “Agent”) and the Company and all of its wholly-owned United States and
Puerto Rican subsidiaries (the “Agreement”). Under the Agreement,
which was effective as of January 15, 2009, the Company appointed the Agent to
conduct the sale of the merchandise located at 567 retail stores and
distribution centers and, to the extent designated by the Company, to dispose of
certain furnishings, trade fixtures, equipment and improvements to real property
with respect to such stores and centers. The determination to enter
into the Agreement resulted from the Company’s decision to take the necessary
steps to liquidate the assets of the Company and its subsidiaries as part of the
Chapter 11 proceedings.
The
Agreement sets forth the terms and conditions of the sales at the closing retail
stores and distribution centers and the corresponding rights and obligations of
the Agent. The Agreement provides that the sales will commence on
January 17, 2009 and will be completed on or before March 31,
2009. The completion date may be extended by mutual agreement of the
parties to the Agreement.
Payments
to the Company and the Agent will be made from the proceeds of the
sales. Pursuant to the Agreement, payments will be made first to each
of the Company and the Agent to reimburse each party for its expenses with
respect to sales. The Company then will be paid a guaranteed amount
equal to 70.5% of the cost value of the merchandise included in the sales,
subject to certain adjustments, and the Agent will receive an agent’s fee equal
to 1.0% of the cost value of the merchandise. To the extent that the
total proceeds from the sales exceed the sum of expenses, the guaranteed amount
and the agent’s fee, the remaining proceeds will be shared, first, 70% to the
Company and 30% to the Agent until the Agent has received an aggregate amount
equal to 3.0% of the cost value of the merchandise included in the sales and,
thereafter, 90% to the Company and 10% to the Agent.
The
Agreement contains customary representations, warranties, covenants and
indemnities by the Company and the Agent. Under the Agreement and the
Order, the Company and its subsidiaries granted to the Agent a security interest
in the merchandise included in the sale, the furnishings, trade fixtures,
equipment and improvements to real property located in the closing retail stores
and distribution centers, and all proceeds of such merchandise and
property. The security interest is junior to the security interests
under the Company’s existing debtor-in-possession credit facility.
A copy of
the Agreement is attached as Exhibit 10.1 to this report and is incorporated by
reference into this Item 1.01.
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Item
2.05
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Costs
Associated with Exit or Disposal
Activities.
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On
January 16, 2009, the United States Bankruptcy Court for the Eastern District of
Virginia approved, at the Company’s request, a plan for the Company to close 567
retail stores and distribution centers. In addition, on January 16,
2009, the Board of Directors of the Company approved a plan to terminate the
employment of all of the Company’s employees. The approval of each of
these plans resulted from the Company’s decision to take the necessary steps to
liquidate the assets of the Company and its subsidiaries as part of the Chapter
11 proceedings.
The
Company is currently unable in good faith to make a determination of an estimate
of the amount or range of amounts expected to be incurred in connection with
each of the plan to close retail stores and distribution centers and the plan to
terminate the employment of all of the Company’s employees, both with respect to
each major type of cost associated with each plan and with respect to the total
cost of each plan, or an estimate of the amount or range of amounts that will
result in future cash expenditures.
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Item
2.06
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Material
Impairments.
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As
disclosed in Item 2.05 above, the United States Bankruptcy Court for the Eastern
District of Virginia approved, at the Company’s request, a plan for the Company
to close 567 retail stores and distribution centers. The plan will
result in a material charge for impairment to certain of the Company’s
long-lived assets with respect to those stores, including leasehold improvements
and furniture, fixtures and equipment.
The
Company is currently unable in good faith to make a determination of an estimate
of the amount or range of amounts of the impairment charge or an estimate of the
amount or range of amounts of the impairment charge that will result in future
cash expenditures.
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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On
January 16, 2009, the Company provided notice to each of its employees that it
is anticipated that each employee’s employment with the Company will terminate
on March 21, 2009 or a date within 14 days thereafter that the Company may
subsequently provide. The Company made such notice pursuant to the
Worker Adjustment and Retraining Notification Act in connection the Company’s
plan to terminate the employment of all of the Company’s
employees. The employees that received this notice included the
following individuals who are principal or named executive officers of the
Company: James A. Marcum, Vice Chairman, Acting President and Chief
Executive Officer and a director of the Company; Bruce H. Besanko, Executive
Vice President and Chief Financial Officer; John T. Harlow, Executive Vice
President and Chief Operating Officer; Reginald D. Hedgebeth, Senior Vice
President, General Counsel and Secretary; Eric A. Jonas, Jr., Senior Vice
President – Human Resources; and Michelle O. Mosier, Vice President and
Controller and the Company’s principal accounting officer. Because
the Company will retain certain individuals to manage the process to liquidate
the assets of the Company and its subsidiaries as part of the Chapter 11
proceedings, the Company has not yet finalized the specific date of termination
for any of these individuals.
In light
of the Company's January 16 notice to employees, on January 21, 2009, Bruce H.
Besanko, the Company’s Executive Vice President and Chief Financial Officer
since 2007, advised the Company that, effective as of February 15, 2009, Mr.
Besanko will leave the Company and join OfficeMax Incorporated in the same
positions.
When Mr.
Besanko leaves the Company, Michelle O. Mosier, Vice President and Controller
and the Company’s principal accounting officer, will become also the Company’s
principal financial officer. Ms. Mosier, 43, joined the Company in
2003 as Director – Financial Reporting and was promoted to Vice President in
2005. She has served as Vice President and Controller since 2007 and
will remain in those positions.
On
January 16, 2009, the Company issued a press release announcing that it will
liquidate all of its assets as part of its Chapter 11
proceedings. The Company does not anticipate that any liquidation
payments will be made to its equity security holders.
The press
release is being filed as Exhibit 99.1 to this report and is incorporated by
reference into this Item 8.01.
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Item
9.01
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Financial
Statements and Exhibits.
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(d) Exhibits.
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Exhibit
No. |
Description |
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10.1 |
Agency
Agreement, dated as of January 15, 2009, by and between Great American
Group WF, LLC, Hudson Capital Partners, LLC, SB Capital Group, LLC and
Tiger Capital Group, LLC and Circuit City Stores, Inc. and each of
its wholly-owned United States and Puerto Rican
subsidiaries |
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99.1
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Press
release issued January 16,
2009
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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CIRCUIT
CITY STORES, INC.
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(Registrant)
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Date: January
23, 2009
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By: /s/Reginald D.
Hedgebeth
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Reginald
D. Hedgebeth
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Senior
Vice President,
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General
Counsel and Secretary
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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10.1 |
Agency
Agreement, dated as of January 15, 2009, by and between Great American
Group WF, LLC, Hudson Capital Partners, LLC, SB Capital Group, LLC and
Tiger Capital Group, LLC and Circuit City Stores, Inc. and each of
its wholly-owned United States and Puerto Rican
subsidiaries |
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99.1
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Press
release issued January 16,
2009
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