Arizona grocer Bashas' rejects bid from AlbertsonsPosted: Updated:
PHOENIX (AP) -- Arizona grocery chain Bashas' Inc., which is working to emerge from bankruptcy protection, has rejected a buyout offer of at least $260 million from rival Albertsons LLC.
Albertsons CEO Ralph Miller sent a letter including the offer to Bashas' chairman Eddie Basha Jr. this month. It was revealed in a filing in U.S. bankruptcy court by lawyers representing Bashas' lenders.
The lenders' filing says Bashas' hadn't disclosed it had been approached by Albertsons until the letter forced its hand.
The offer was deemed insufficient and the company is on track to emerge from bankruptcy in April, Bashas' attorney Michael McGrath said Wednesday.
"We had no idea what Albertsons' proposal was," McGrath said. "They talked about a payment, but they gave us no terms, whether it was cash, or stock, or payments over time."
Albertsons LLC is a privately owned chain that operates nearly 230 stores in Arizona, Arkansas, Colorado, Florida, Louisiana, New Mexico, and Texas. It was created to acquire stores considered underperforming when a group led by SuperValu Inc. bought Boise, Idaho-based Albertsons Inc. in 2006.
Family-owned Bashas' was stung by the national credit crisis, slowing growth and the hyper-competitive Phoenix-area grocery market. It filed for a planned Chapter 11 bankruptcy reorganization in June.
The Chandler, Ariz.-based company closed 31 of its more than 155 stores, laid off about 1,000 workers and negotiated store leases to cut costs. Besides Bashas' stores, the company operates Food City, which caters to Hispanic shoppers, and high-end grocer AJ's Fine Foods. All but a handful are in Arizona.
The company filed a reorganization plan last month that would allow the family to maintain equity and repay creditors over a period of years.
The company now has about $271 million in liabilities, not including claims arising from leases it broke during store closings and other items, McGrath said. Included is an estimated $60 million owed to vendors, $110 million to banks and $86 million to bondholders. Its assets are estimated at $386 million.
The Feb. 5 Albertsons letter to Bashas' top executive said the companies had meetings and discussions over the past year about combining the two companies. After the bankruptcy filing, Bashas' management asked for the talks to be deferred until the company emerged from bankruptcy.
Albertsons' Little wrote that the company was "prepared to offer between $260-290 million of value" for the vast majority of Bashas' assets. It called the offer a "substantial premium" to that shown in the reorganization plan the company submitted and said it had hired Credit Suisse Securities as a financial adviser and outside legal counsel to pursue the deal.