State and federal officials have formulated a plan to help save thousands of PA retail jobs.
The U.S. Department of Housing and Urban Development recently approved a plan that Gov. Edward G. Rendell initiated in November 2008. The plan will provide a $43.7 million loan to help save 24 Boscov’s department stores and retain the company’s 5,000 employees throughout Pennsylvania.
“This is great news for Pennsylvania, its people, communities and one of our most respected businesses,” Rendell said. “Boscov’s has been a cornerstone of many communities in Pennsylvania since 1918. Today, with 24 locations throughout the state and more than 5,000 employees, they remain a significant part our economy.
“To their credit, Al Boscov and his associates have worked diligently to help preserve that presence and keep their workers employed,” he added. “They’ve put tens of millions of dollars of their own money on the line because they believe in this company and its employees. Pennsylvania does, too, and that’s why we worked so hard to provide them with the help they needed to emerge from bankruptcy.”
Last year Rendell and the State of Pennsylvania applied for a HUD Section 108 loan guarantee for $35 million to help Boscov and its partners acquire the company and help it emerge from bankruptcy proceedings. The buyers also applied $60 million in private equity and $200 million in conventional bank loans towards the purchase.
“This loan completed the financial package necessary for us to purchase the company and save over 5,000 jobs in Pennsylvania,” Boscov said. “We appreciate that it’s the loyalty of our customers and our coworkers that’s made it possible for us to exceed our projections in a very tough economic environment, but none of this would have been possible without Governor Rendell’s efforts. We’ll continue to work hard to bring the best possible values to our customers.”
Overall, six counties were approved for the loan guarantee, including Butler, Blair, Cambria, Lackawanna, Lebanon and Schuylkill, and the state has committed to covering the loan if Boscov’s defaults. Boscov’s has committed real estate and assets valued at more than two times the amount being guaranteed by state and local loans, so no county grant money would be at risk.
The loan guarantees from the six counties represent $35 million of the $43.7 million approved by HUD. The remaining balance is from similar guarantees from the cities of Scranton and Wilkes-Barre, as well as Vineland, N.J.