Bitter Break Up for Sears and IT Service
New York City, Sears, Roebuck & Co.’s massive IT outsourcing contract with Computer Sciences Corp. to manage its computer and phone networks and Web sites has descended into finger-pointing and acrimony. Computer Sciences has said the retailer ended the $1.6 billion contract to avoid paying millions in termination fees. Previously, Sears said that it canceled its 10-year deal with Computer Sciences because the contractor failed in certain duties, charges that Computer Sciences denies. A federal judge denied Computer Sciences’ suit to stop Sears from ending the contract for cause, Sears said Friday.
Pennsylvania Proposes That Wal-Mart Fork Over Health-Care Dollars
Harrisburg, Pa., Although Pennsylvania lawmakers say they are appreciative of the jobs Wal-Mart has brought to the area, critics are saying the jobs have come with a hidden cost: an unusually high percentage of Wal-Mart workers do not have company-paid health insurance and are relying on taxpayer-subsidized care.
To gather data and help combat the problem, lawmakers have proposed legislation that requires companies with 20 or more employees to issue annual reports stating how many of them are receiving Medical Assistance. Sponsors of the bill say it is the first step toward mandating that large companies pay their fair share of health costs.
In response to this and other states’ similar efforts, Wal-Mart has responded that it is being unfairly targeted. “They are nothing more than a political attempt by organized labor to make Wal-Mart less competitive in certain states,” said a Wal-Mart spokesman.
KB Files Plan of Reorganization
Pittsfield, Mass., KB Toys, Inc. and a committee of its creditors have filed a joint reorganization plan that would transfer ownership of the company to a New York City investment firm, unless a better offer is received. Under the plan, an affiliate of Prentice Capital Management, LP will invest $20 million in cash and in a $25 million credit facility. The company is seeking in the U.S. Bankruptcy court of Delaware to hold an auction to solicit other offers. If the Prentice offer goes through, it would add to a $150 million credit line already secured from a syndicate led by Bank of America.
The toy retailer filed for bankruptcy in January 2004, blaming price-cutting by major discount retailers during the 2003 holiday season. KB currently is owned by Bain Capital of Boston and a group of KB executives, including CEO Michael L. Glazer.