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Reorganized Wickes out of Chapter 11

Wickes Companies, Inc. completed the largest successful corporate reorganization in United States business history last month when its joint plan of reorganization became effective on Jan. 26, 1985.

The plan settled approximately $1.6 billion in Chapter ll debt through the payment of approimately $600 million in cash and through the issuance of various classes of debt and equity securities of the reorganized Wickes.

Under the plan Wickes Companies, Inc., The Wickes Corp. and Gamble-Skogmo, Inc. were merged into a single entity to be called Wickes Companies, Inc.

Things are looking up for Wickes although Sanford C. Sigoloff, chairman and chief executive officer, says "We didn't come out of Chapter I I with the best balance sheet in the world, but that was a tradeoff for getting out quickly."

Sigoloff is mainly credited for leading the company through the bankruptcy proceeding successfully. The second largest company (Penn Central Co. was the largest) to attempt such a reorganization, the revived Wickes is healthier and in better condition than before.

Sigoloff, who gained a reputation for bailing out sinking companies when he pulled Daylin Inc. from the depths of Chapter I I in the '70s, took command of Wickes in March, 1982. At that time, Wickes, a $4 billion retailer, was swamped by the acquisition of another retailer, Gamble-Skogmo, and losses of $410 million. Bankers were demanding payment and vendors were refusing to ship without prepayment.

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Part of the problem was blamed on antiquated accounting systems which could not keep up. No one was really sure just how fast the company was sinking. Reportedly, bookkeepers at one major division actually wore green eyeshades and laboriously entered columns of figures into ledgers.

"The Gamble acquisition had broken the company's back," says Sigoloff. "The slumping economy made its coffin and the creditors had all the nails."

The 40 separate divisions of Wickes were scattered worldwide with nearly 250,000 individual creditors and numerous intracompany transactions adding up to a debt of $2 billion.Sigoloff andhis crew hesitated over trying Chapter I I reorganization, but creditor lawsuits and a judicial order forbidding the transfer of cash or assets among divisions made it the only viable solution in their eyes.

In addition to debts and outmoded operations, the new management had to solve the problem of bare shelves, which creditors refused to stock, and rundown stores. These conditions were especially prevalent in the Builders Emporium division.

After grabbing the lifeline of Chapter I I bankruptcy, Sigoloff made the decision to cast off Aldens Inc., a 93-year old catalog subsidiary based in Chicago. This was the first of 15 divisions to be closed or sold in 2Yz years.

Annual revenue was cut from $4 billion to $3 billion. Employees declined from 40,000 to 28,000 with the corporate staff alone trimmed from 400 to 125. Substantial capital improvements and installation of a sophisticated electronic management-information system were undertaken.

Part of the success of the reorganization is credited to Sigoloff's openess with creditors. Early on in June, 1982,

WESTERN RED CEDAR. THAT'S ALL WE CUT!

Big Bucks In Remodeling

Larger and faster returns on investment dollars, government tax incentives, and the aging of a majority of the nation's buildings have propelled renovation and rehabilitation work into new prominence in the construction market, according to McGrawHill Information Systems Co.

This previously "hidden" market -which accounts for tens of billions of dollars in construction spendingis now viewed as being worthy of consideration on its own, and not merely as an off-shoot of the new construction sector, traditionally considered more "exciting."

"More than 6090 of this nation's residential and commercial buildings are over 22 years old," said John G. Behmke, Sweet's vice president/marketing. "These buildings will need work to remain energy efficient and to meet the changing needs of our society. Realizing the tax revenues and jobs which these projects create, Federal, state and local governments are backing renovation projects in the form of tax easements, historic certification, financing and tax credits.

In addition, private investors are finding that the return for their investments in older buildings comes in bigger and faster than on new construction. "

"The steady growth of renovation and rehabilitation in all sectors of the construction market. from houses and office buildings to shipyards and bridges, and at all levels, from small independent contractors to national building owners, should mean increased revenues for building product

Tattletale Grey ls the In Color

Greys are the new neutrals for 1985 replacing beiges in new product offerings for home furnishing such as floor, window and wall coverings.

The trend toward gentle colors is not only fashionable, but practical, according to forecasters at Armstrong World Industries, Inc. With building costs increasingly on the rise, pastel colors make rooms in smaller homes appear larger. Although the color palette is light, it is cleaner in hue.

With grey the neutral, mauve, rust and peach have evolved as primary accents followed by burgundy, blue and teal as secondary accents. While grey will continue to dominate as the neutral part of the palette, the Armstrong panel agrees that greyed versions of other colors will become less and less grey over the next few years.

The Merchant Magazine manufacturers. " Behmke said. "Many of the same products that are purchased for new construction are used for remodeling and renovation purposes. In some cases, higherquality and higher-priced items, which often have greater profit margins for the manufacturers, are purchased by renovators. Products that are custom-made. constructed of natural materials, or compatible with older building styles are especially sought by this market."

Colored greys like lavender-grey are the new direction. This influence. already being seen in fabrics, wallcoverings and accessories, comes from many influences including interest in natural finishes like marble, graphite and metallics.