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THORNTON, Colo. (AP) -- Consumer electronics retailer Ultimate Electronics Inc. will lay off more than 25 percent of its work force and close nearly one-half its stores as part of a bankruptcy reorganization.
Ultimate received a default waiver from its lender which provided most of the reorganization financing, according to a Securities and Exchange Commission filing on Wednesday. Ultimate was in default on that loan.
A telephone message seeking additional comment was not returned Thursday.
The announcement occurred about a month after Mark Wattles, 44, former head of the Hollywood Entertainment video chain, was named chairman and CEO of Ultimate.
Ultimate, which operates 62 stores in 14 states, said it would close 30 stores in Iowa; Kansas City, Mo.; South Dakota, Texas and Utah. The closures will occur by June 30.
About 965 employees will be affected the closures, including 65 central office employees.
It plans to continue to operate 32 stores in Arizona; Kansas; Minnesota; St. Louis, Mo.; Nevada; New Mexico and Oklahoma. The filing did not mention stores in Colorado, which operate under the SoundTrack name, or in Idaho and Illinois.
Previously, Ultimate said it would close three stores, including one in suburban Highlands Ranch, where leases had been set to expire.
Roger Heuberger, president of Progress Retailers Organization, a buying group for smaller electronics retailers, said he believes Ultimate ran into problems when it began to expand rapidly.
He praised the move to close stores in markets where Ultimate has not done well.
"I think what goes on in some of these other markets is that there are some strong regional TV and appliance stores that make those markets harder than they might look like from the outside," he said.
Ultimate filed for Chapter 11 on Jan. 11, one day after Wattles spent $4.4 million to acquire a controlling interest and loaned the company $5.6 million.
Some shareholders led by Atticus Capital LLC asked the bankruptcy court for permission to establish an official equity committee after Ultimate said its reorganization was unlikely to result in value for common stockholders.
(Copyright 2005 by The Associated Press. All Rights Reserved.)