Minding The Stores

It's not going to make The New York Times best-seller list, but the reorganization plan for Federated Department Stores Inc. and Allied Stores Corp. will make riveting reading for a horde of bankers, bondholders, and suppliers. The plan, due Apr. 29 in U. S. Bankruptcy Court in Cincinnati, details how the companies' managers will take the two retail groups out of Chapter 11, where they landed last year after their owner, Canada's Campeau Corp., stumbled under some $7 billion in debt.

Executives at the stores are keeping their lips zipped. But according to creditors, bankers, and analysts, the plan proposes to pare liabilities for the two chains to something between $1.5 billion and $2 billion. To wipe away the debt, Federated and Allied Chief Executive Allen I. Questrom wants to swap varying parcels of cash and stock to creditors, depending on their seniority. Since the equity technically belongs to Campeau's U. S. holding company, a swap of stock for debt would end Campeau's control of Federated and Allied. Creditors could then sell these shares in a reorganized Federated Stores Inc. to the public.