Korvettes Inc., which promised its lenders it would have a much-delayed $26 million payment for today, showed up at a scheduled meeting emptyhanded, banking sources reported.
At the same time, the discount chain's French parent said in Paris today that it made a mistake buying Korvettes and wants to sell it.
A spokesman for Korvettes said he knew nothing about the meeting with the lenders -- Chase Manhattan Bank, Bankers Trust, Manufacturers Hanover Trust and Prudential Insurance Co. -- and he knew nothing more about the announcement by Korvettes' parent, the Agache-Willot Group, than he saw on the news wires.
Korvettes owes the banks and Prudential $55 million, but the lenders are willing to let the company off the hook for a payment of $26 million now and $2 million after the first of the year.
The lenders had expected to be paid last week, but Agache-Willot begged off, saying it needed approval of the French authorities to transfer the $26 million to the United States. The company said last Wednesday that it had received French permission and would have the money today.
Bankers were skeptical then, and apparently with good reason.
"The French came into the meeting today without any money," said an official of one of the banks involved. "Our best-informed surmise is that they will pay us some of the $26 million tomorrow (Wednesday) and the rest in subsequent payments."
The lenders and officials of Korvettes and Agache-Willot met into last night, but neither side would comment on the discussions, and it wasn't clear what strategy the lenders were pursuing.
Joseph A. Ris, who was brought in as Korvettes' chairman last spring, resigned three weeks ago after the French parent killed an agreement he had reached with the lenders. Under heavy pressure from the banks -- who had seized Korvettes' deposits and threatened to throw the chain into bankruptcy -- Ris was lured back, and he negotiated another arrangement with the creditors.
So far, however, banking sources said that Korvettes and Agache-Willot have not made good on the latest arrangement, either.
Korvettes also is having troubles with its suppliers who are reluctant to ship merchandise to the chain, Agache-Willot has pledged that it will pay all its debts to its suppliers in cash.
But Agache-Willot said today that the company "has realized that buying Korvettes was a bad investment which was further affected by the American recession and high U.S. interest rates." It said it wants to sell the company, a development that undoubtedly will make Korvettes' relationship with its suppliers shakier.
Last week Jean-Pierre Willot Jr., son of the chairman of the giant French retailer, resigned as vice chairman of Korvettes to assume a post with Agache-Willot in New York. The French company is valued at about $3.5 billion and owns, among other things, Christian Dior.
Korvettes, the first U.S. discount chain, has closed about 15 of the 50 stores it owned when Agache-Willot purchased the company from Arlen Realty & Development last year for $31 million.
Agache-Willot said it wanted to make Korvettes a New York area chain rather than a nationwide discounter as it is now.