Dairy Mart voluntarily seeks Chapter 11

By Paul A. Harris

St. Louis, Mo., Sept. 24 - Dairy Mart Convenience Stores, Inc. said Monday that it and substantially all of its subsidiaries filed voluntary petitions for protection under Chapter 11. According to the announcement, the company and its stores will continue to operate normally.

"This company has been through a tumultuous period," commented Gregory G. Landry, president and CEO of Dairy Mart Inc.

"Court protection will now allow us to stabilize the situation so that Dairy Mart's new management team can take steps to build value and make this a better company," Landry continued, adding that Dairy Mart "must improve store performance and lighten the burden of its present capital structure" in order to be successful.

According to the announcement Landry was appointed chief executive officer of the company on July 30, when Dairy Mart Inc. terminated an agreement to merge with DM Acquisition Corp., because financing was not in place.

The announcement also stated that Dairy Mart is seeking court approval for a debtor-in-possession (DIP) credit facility of up to $46 million with a group of lenders led by Foothill Capital Corp. Pending a further hearing, Dairy Mart is seeking immediate authorization to use up to $10.75 million of the DIP facility. The DIP financing will be used for employee salaries and benefits, ongoing operations and other working capital needs.

Hudson, Ohio-based

Dairy Mart Convenience Stores, Inc. owns or operates approximately 550 retail stores in seven states located in the Midwest and Southeast.

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