Mervyns Receives Final Approval of Its Debtor-in-Possession Financing

HAYWARD, Calif.--(BUSINESS WIRE)--Mervyns, the leading mid-tier department store chain in California and the Southwest, today announced that the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) granted final approval of the Company’s $465 million debtor-in-possession (DIP) financing facility. The DIP financing was approved by the Bankruptcy Court with the support of the Creditors’ Committee and all objections were resolved or withdrawn. The facility is being provided by a group of lenders led by Wachovia Capital Finance Corporation (Western) as agent. The Company previously received interim approval of the DIP financing facility from the Bankruptcy Court on July 31, 2008.

The DIP financing and cash generated from operations will be used to continue to pay vendors and employees, as well as to provide operational and financial stability as Mervyns proceeds with its restructuring. The Company is currently in compliance with all of the terms and conditions of the DIP financing agreement.

“The Court’s approval of our DIP financing is a significant step in our reorganization process and one we are pleased to have accomplished,” said John Goodman, Chief Executive Officer of Mervyns. “Our DIP financing provides Mervyns with the liquidity and stability it needs to continue serving our customers and meeting our obligations to vendors. With this final DIP financing in place and our financial position now strengthened, we are able to maintain our operations while continuing our discussions with creditors as we focus on emerging from bankruptcy.”

Mr. Goodman concluded, “We appreciate the ongoing support of our loyal customers, trusted vendors, and hard working employees as we progress through our restructuring.”

As previously announced, Mervyns will close 26 stores by late October or early November this year, with closing sales scheduled to begin on August 28, 2008. Mervyn’s LLC (which operates the Mervyns business), together with Mervyn’s Holdings, LLC (parent of Mervyn’s LLC) and Mervyn’s Brands, LLC (subsidiary of Mervyn’s LLC), filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware on July 29, 2008. The lead case has been assigned case number 08-11586.

About Mervyns

Mervyn’s LLC, headquartered in the San Francisco Bay Area, is a family-friendly promotional neighborhood department store offering trend-right fashions and home décor for the entire family at affordable prices. Mervyns has a well-earned reputation for its extensive selection of national and private-label fashions and housewares. Community giving has been a cornerstone of the company's business since 1949, with a focus on improving the lives of children and families by giving back to its communities by way of volunteerism and through its award-winning ChildSpree® program. Mervyns currently operates 175 locations in seven states. For more information, go to www.mervyns.com.