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View Full Version : Microsoft, Others Oppose Kmart Bluelight.com Sale


medea
Oct 29, 2002, 11:35 AM
http://www.reuters.com/news_article.jhtml?type=internetnews&StoryID=1649541
CHICAGO (Reuters) - Kmart Corp. KM.N , the bankrupt discount retailer, may get the red light in its bid to sell Internet unit Bluelight.com.

Software giant Microsoft Corp. MSFT.O and others have filed objections to the proposed $8.4 million sale of Bluelight.com to United Online Inc. UNTD.O , citing software licensing and tax issues among their concerns. The U.S. Bankruptcy Court in Chicago is slated to hear Kmart's motion on the sale on Wednesday.

Kmart filed for Chapter 11 bankruptcy protection in January, citing weak holiday sales and fierce competition. At that time it said it wanted to sell its Internet service provider as part of an effort to focus only on its core retailing business.

Some of Kmart's lenders and the states of Illinois and Washington also filed objections to the deal, which was announced in September.

According to court documents, Microsoft said Kmart had not specifically identified which Microsoft software licenses it planned to transfer to United Online as part of the sale.

"The licenses that debtors (Kmart) have of Microsoft's products are licenses of copyrighted materials and, therefore, may not be assumed or assigned with Microsoft's consent," the software giant said in its objection, filed last week.

Illinois and Washington objected because they said Kmart was seeking exemption from various local and state taxes.

Lenders led by J.P. Morgan Chase & Co. Inc. JPM.N also filed an objection, saying the proceeds from any sale should be reserved for the creditors and not go directly to Kmart.

The lenders group "does not object to the asset sale per se ... The agent (for the lenders) asserts that proceeds of this non-ordinary course sale must be segregated and not used by Kmart," J.P. Morgan said, adding that a separate bank account should be set up to hold the money for creditors.

A Kmart spokesman said the company planned to file a response to the objections with the court later on Tuesday and would not comment before then.

Bluelight.com, which consists of the Internet service provider and Kmart's e-commerce Web site , was valued at about $80 million for the combined company in August 2001. Subscribers to the service once numbered 7 million, but have dwindled to about 165,000.