Friday, November 21, 2008

Local Bailout Money

The Times Leader is reporting the cash-strapped municipalities of Wilkes-Barre and Scranton and the deficit laden state of Pennsylvania will work together on a bailout package to save Boscov’s Department Store.

The governmental bodies will assist in the form of loans with monies financed through the US Department of Housing and Urban Development program guaranteed with federal Community Development Block Grants.

The total price tag on the endeavor is $300 million with Scranton and Wilkes-Barre both loaning $3 million each. Pennsylvania will loan $35 million.

The Boscov family is also contributing $50 million in their own cash. Other municipalities that host Boscov’s Stores are also committed or in the process of attempting to secure funding as well.

According to the funding will be used so that Al Boscov and Edwin Lakin can purchase the assets of Boscov’s. There was talk of selling to Philadelphia-based Versa Capital Management earlier in the year. Talks were progressing but now they seem to have torpedoed that plan. Because of the change of plans, Versa may now be entitled to a $4 million breakup fee.

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