Liberty House gets
$50 million loan

Lender group
gives go-ahead

By Russ Lynch
Star-Bulletin

Liberty House now has access to the $50 million in financing promised by a group headed by Bank of America.

Tom Roesser, a Honolulu attorney representing the lender group, said today that the banks signed an agreement late last week amending their offer and releasing the full $50 million.

John Monahan, president of Liberty House, confirmed that the money is now available. It will make it easier for the retail stores to build up inventory because vendors will be encouraged to sell to Liberty House on normal credit terms, Monahan said.

However, there was still criticism of the time it took for the loan to come through and there is a dispute in court over who should make up the board of directors controlling Liberty House.

JMB Realty Corp., owners of Liberty House since 1988, said there were "inexcusable delays" in getting the money since the banks promised on April 10 that it would be available in 30-45 days.

JMB earlier had promised an immediate $50 million loan from General Electric Capital Corp but the court approved the banks' offer.

A statement issued today by Steven Plonsker, executive vice president of JMB Realty, called the banks' financing "woefully late" and said the delay had threatened Liberty House's ability to buy for the fall and holiday seasons.

But Roesser said the delay was needed because the appraisals reduced the value of the Liberty House store leases, which are the collateral for the loan. The banks needed to restructure their offer to lend up to 80 percent of the value rather than 40 percent as originally offered, Roesser said.

Liberty House filed March 19 for protection from creditors while it tries to reorganize. Complicating that effort is the fight over who controls the business. The banks said they should be in control because Bank of America is by far the largest creditors. JMB Realty said it should because it owns the company.