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UPDATED: 162-Store Jewelry Chain, Ultra Stores, Emerges from Bankruptcy

Ultra Stores Closing 30 Underperforming Stores
August 3, 2009
Update Published 8/3/09: Ultra Stores Emerges From Bankruptcy, But Closing 30 Stores
Ultra Stores Inc., the off-price jewelry retailer that filed bankruptcy in April 2009, emerged from Chapter 11 last week. In moving ahead, however, Ultra said it would close about 30 underperforming locations by the end of 2009. Crystal Capital and Bank of America provided Ultra with funding for this recovery, but additionally, the chain said that the landlords of 178 of its locations agreed to provide temporary rent relief.

Bank of America is providing Ultra with a $30 million line of credit, while Crystal Capital assumed 56% ownership of Ultra in exchange for the conversion of half of its debt into equity. Ultra's unsecured creditors will hold an 18% ownership share in the jewelry chain, plus a $3 million note. Last, Ultra's management team is assuming a 26% ownership interest.

Original Story Published April 13, 2009
Off-price jewelry chain, Ultra Stores Inc. (also known as ULTRA Diamond Outlet), filed chapter 11 at the U.S. Bankruptcy Court in Southern District of New York on Apr. 9, 2009.

Aside from slow sales in line with the down economy, Ultra suffered an $11 million loss in liquidity, as it defaulted on a Bank of America credit facility and term loan held by Crystal Capital Fund Management. The company said Bank of America agreed to provide a $30-million debtor-in-possession facility to fund Ultra's operations during the bankruptcy process.

Ultra, which is partially held by private equity company William Blair & Co., listed assets and liabilities between $10 million and $50 million in the filing. This is Ultra's second time in bankruptcy -- The company last filed in March 2001 and emerged in early 2002. According to Hoover's, Ultra reported 2007 revenue of about $55.8 million and employs about 650 people.

On its website, the Chicago-based retailer said it currently operates 162 stores across the country, but Reuters said the retailer has 181 locations, in addition to operating jewelry counters within Filene's Basement, Burlington Coat Factory, and Daffy's stores. The company requested court permission to immediately start liquidation sales at 12 stores, but also asked that it have the freedom to close more stores in the future without court approval.

Several of Ultra's stores are located in prime downtown shopping areas, but the majority are located at outlet shopping centers. According to CoStar Tenant, Ultra is a popular tenant at Tanger's factory outlet centers and its stores are typically 2,000 square feet.

This story appears in CoStar's Retail News Roundup: Apr. 12 to 18, 2009, a weekly column by CoStar senior news editor, Sasha Pardy.
This week in the Retail Roundup, CoStar reports on expansions or new concepts at Red Mango and Giant Food Stores; new retail development news in AZ and NY; acquisition, merger, loan or sale activity at WP Realty, Macquarie DDR Trust, Highwoods and Lane4, Dividend Capital and ING Clarion; closings, cutbacks, defaults, or bankruptcies at Z Gallerie, Ultra Stores, General Growth, Bruno's Supermarkets, Starbucks, and Fatburger; personnel announcements at Equity One and Ramco, SRS Real Estate, RCS Real Estate Advisors, and Sperry Van Ness; sustainability or green building news at BrandsMart and Target; and more.
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