Penske Auto Centers Calls Kmart Press Release Misleading

TROY, Mich., April 6 -- Senior officials of Penske Auto Centers, LLC (PAC) including Richard J. Peters, Chairman, Jim Wheat, President, and Roger S. Penske, Director announced today that the April 6, 2002, press release regarding Penske Auto Centers issued by Kmart Corporation was misleading. PAC, which is owned 64% by a subsidiary of Penske Corporation and 36% by Kmart, has operated 563 auto service centers at Kmart locations nationwide.

Richard Peters stated, ``After reviewing the release from Kmart this afternoon, I feel obliged for the benefit of our employees and customers to provide background on some of the events surrounding PAC's decision to discontinue operations. Over the past five months, PAC management has conducted numerous meetings with senior Kmart officials to discuss strategies to provide support to PAC during Kmart's restructuring and subsequent Chapter 11 bankruptcy filing. During that period, Penske Corporation provided over $40 million to support the viability of PAC.''

On March 27, 2002, Peters and Penske met with Kmart's Chief Operating Officer, Julian Day and Chief Restructuring Officer, Ronald Hutchinson. Peters, commenting on the meeting, stated, ``Julian Day informed us that Kmart had determined through their research that the auto centers provided no value to its core business. Kmart was therefore unwilling to provide any support to PAC and agreed that the best course of action was to close PAC.''

Peters added further, ``On April 1, Kmart then defaulted on a $5 million payment that was contractually due to PAC as a result of the Kmart store closures announced in March.''

PAC will appear before the court in Chicago on April 8 to protect its interests. Peters added, ``Our immediate focus is on the well being of our employees and their families as well as our customers. I regret that these actions had to be taken.''