Target Corporation will discontinue operating stores in Canada through its indirect wholly owned subsidiary, Target Canada Co. As a part of that process, this morning Target Canada filed an application for protection under the Companies’ Creditors Arrangement Act with the Ontario Superior Court of Justice in Toronto.
Target Canada currently has 133 stores across the country and employs approximately 17,600 people. To ensure fair treatment of Target Canada employees, Target Corporation is seeking the court’s approval to voluntarily make cash contributions of C$70 million (approximately US$59 million) into an employee trust. The proposed trust would provide that nearly all Target Canada-based employees receive a minimum of 16 weeks of compensation, including wages and benefits coverage for employees who are not required for the full wind-down period. Target Canada stores will remain open during the liquidation process.
Subject to court approval, Target Corporation has committed to provide a US$175 million debtor-in-possession credit facility to finance Target Canada’s operations during the CCAA proceedings.
As a result of the CCAA filing, Target Corporation has determined that Target Canada and its subsidiaries will be deconsolidated from Target Corporation’s financial statements as of the date of the filing. Target Corporation expects this decision will increase its earnings in fiscal 2015 and beyond, and increase its cash flow in fiscal 2016 and beyond.
