Giant Eagle Buys 5 Former Penn Traffic Stores – Update
Supermarket retailer Giant Eagle
will purchase five former Penn Traffic stores, including pharmacy records at three locations, from Tops Friendly Markets for an undisclosed sum. The five stores involved in the transaction are located in Brookville, DuBois, Johnstown, St. Marys, and Titusville, PA.
Tops will begin immediately its planned store inventory liquidation sales in preparation for the eventual closure of the five locations. At the time of the stores' closings, the properties will be turned over to Giant Eagle. Beginning during the liquidation sales and continuing through the closure and transition period, in-store pharmacies at the Brookville and DuBois locations will remain open, allowing customers to continue to order and pick up prescription medications.
Giant Eagle has agreed to acquire the pharmacy records for the former Penn Traffic pharmacies in the Brookville, DuBois and Johnstown locations, and plans to operate the existing pharmacies at Brookville and DuBois. The pharmacy files from the Johnstown location are being transferred to a nearby existing Giant Eagle store.
Giant Eagle says it will evaluate all opportunities regarding these stores, including bringing in members of its independent ownership group to manage some of them. Giant Eagle is accepting applications for in-store jobs and is allowing affected employees to apply at other Giant Eagle locations.
Tops Sells 6 Penn Traffic Stores to Price Chopper
In addition to selling five former Penn Traffic stores to Giant Eagle, Tops
is selling six P&C supermarkets it purchased to regional supermarket retailer Price Chopper. As reported by WSTM TV, five of the six stores included in the deal are located in upstate New York, in the towns of Canton, Gouverneur, Massena, Potsdam, and West Carthage. The sixth store is located in Lincoln, NH.
Price Chopper, which currently operates 119 stores in New York, Vermont, Pennsylvania, Massachusetts, Connecticut and New Hampshire, says it will clean and refresh the stores, replace front-end registers and computer systems, and replenish product assortment and displays.
Purchase price for the six stores
is $14 million and store staffing will rise 20-30%, according to the Boston Globe. Interestingly, Price Chopper is
currently suing Tops for $1.6 million in damages because it claims Penn Traffic and Tops engaged in a “collusive” bid agreement, according to the Albany Business Journal. Price Chopper bid $54 million for 22 Penn Traffic stores on December 15, 2009. Most of the 22 stores were located in central New York and four stores Penn Traffic had initially tried to purchase shortly after Penn Traffic filed for Chapter 11 bankruptcy in November 2009 were included in the group.
Price Chopper says it had discussed buying all 79 Penn Traffic stores and then entered into a private sale agreement with Penn Traffic for the 22 stores. On January 8, 2010, the day the agreement was scheduled for submission to the bankruptcy court, Tops submitted a bid for all of Penn Traffic’s stores.
According to Price Chopper, Penn Traffic had negotiated with Tops prior to the bid, in breach of the private sale agreement. The $1.6 million in damages represents a 3% break-up fee for the $54 million agreement.
Tops Closes 5 More Penn Traffic Stores
In April 2010, Tops Friendly Markets will
close five stores it purchased in its
January 2010 acquisition of bankrupt supermarket chain Penn Traffic. These closures follow
four Penn Traffic store closures in March 2010.
The five stores include locations in Cortland, Ithaca and Lakewood, NY, a store in Erie, PA and a store in White River, VT. Stores operating under the P&C Foods and Quality Market banners are affected. According to the Syracuse Post-Standard, Tops said “economic viability, current store condition and the ability for the store to successfully compete in the marketplace” are among the criteria used to select these units for closure. The P&C Foods store scheduled to shut down in Cortland, NY is near an existing Tops store which was recently remodeled.
As mentioned above, earlier in March 2010 Tops closed four stores it acquired in its acquisition of Penn Traffic. One store in New York, two in Pennsylvania, and one in Vermont closed their doors, according to WIVB TV in Buffalo, NY. Tops has not specified what or how many stores it will close, but has previously indicated that
stores further away from Penn Traffic’s core central New York market are more likely to shut down.
That places Penn Traffic locations in New Hampshire, Pennsylvania and Vermont at higher risk of closure. However, according to the Syracuse Post Standard, Tops officials say a “small handful” of stores will close and each store will be evaluated on its financial health and potential. Tops may also sell some of the Penn Traffic stores it purchased.
Tops said it would keep all 79 Penn Traffic stores open for at least 30 days from the January 29, 2010 date when the purchase agreement went into effect.
In addition, Tops will reportedly invest an undisclosed sum into renovating stores which remain open. Some employees may be laid off, but Tops said it will solicit feedback from store managers on their employment needs and plans to increase overall employment in an effort to boost business. Existing employees will not be asked to re-interview.
Tops Buys Penn Traffic
According to the Syracuse Post-Standard, Tops finalized its purchase of Penn Traffic for $85 million in cash and $25 million in reduced claims on Friday, January 29, 2010. The purchase agreement has been approved by the U.S. Bankruptcy Court,
District of Delaware, but is still under review by the Federal Trade Commission (
FTC). Tops initially received court approval for
its purchase bid Tuesday, January 26, 2010.
Tops, whose bid was backed by private equity fund Morgan Stanley Private Equity, operated 76 supermarkets in New York and Pennsylvania before the acquisition. Penn Traffic operates stored under the BiLo Foods (not related to Bi-Lo LLC), Quality Markets, and P&C Foods banners.
Penn Traffic Files Chapter 11 – A Brief History
Penn Traffic voluntarily filed petitions for
Chapter 11 protection on November 18, 2009. The case number is 09-14078 and bankruptcy management firm
Donlin Recano is assisting Penn Traffic.
Penn Traffic initially requested permission
to sell its 79 stores and liquidate its merchandise on Monday, December 7, 2009. The retailer had sought to complete sale of its assets by Tuesday, December 29, 2009 and have the sale approved by the bankruptcy court by Wednesday, December 30, 2009.
In a hearing on Tuesday, December 8, 2009, Judge Peter J. Walsh granted Penn Traffic a petition for protection against utilities
shutting off services, according to The Post-Standard. Previously, Penn Traffic received
bankruptcy court approval on a number of first day motions that will allowed it to temporarily continue most operations as usual while it underwent Chapter 11 restructuring activities.
Walsh temporarily granted Penn Traffic requests to continue paying and administering prepetition wages, compensation, benefits and insurance policies, as well as pay certain prepetition carrier and related obligations, pay taxes and continue to use bank accounts and cash management systems.
According to a press release, Penn Traffic’s board of directors determined “…the interests of the company’s creditors and other stakeholders would be best served by seeking Chapter 11 bankruptcy protection to facilitate an orderly sale of its stores and other assets with the consent of its senior secured lenders.” Penn Traffic, which closed eight stores in January 2009, is seeking ongoing bankruptcy court for permission to continue to operate its stores as “debtors in possession” during the bankruptcy process.
Penn Traffic Reports Net Loss
In its most recent
quarterly fiscal report [pdf], released September 15, 2009, Penn Traffic reported a $7 million net loss, 6.8% decline in same-store sales, and 8.5% decline in revenues. On November 4, 2009, Penn Traffic entered a
forbearance agreement [pdf] to maintain letters of credit and other forms of credit through November 25, 2009 with its senior working capital lenders.
Regional Supermarkets File Chapter 11
Penn Traffic is one of several regional supermarket retailer to file for Chapter 11 bankruptcy in the past year. Southeastern chain Bi-Lo LLC filed for
Chapter 11 bankruptcy in March 2009. According to Supermarket News, Belgian conglomerate Delhaize
agreed to purchase Bi-Lo for $425 million last month, with the intent of folding the chain into its Food Lion banner. However, Bi-Lo has since rejected that offer in favor of a cash infusion from its existing owner, private equity firm Lone Star Funds, although Food Lion has publicly stated it is still interested in purchasing at least some of Bi-Lo’s assets.
In July 2009, Bashas’, a regional supermarket retailer with roughly 150 stores in Arizona, California and New Mexico, filed for
Chapter 11 bankruptcy protection, closing 10 stores shortly thereafter. Today, Bashas’ submitted a a preliminary reorganization plan that includes payment in full to all approved prepetition creditors.
Another Southeastern supermarket chain, Bruno’s Supermarkets, met
a similar fate this year. Bruno’s filed for Chapter 11 protection in February 2009 with the intent of remaining in business. However, Southern Family Markets wound up purchasing Bruno’s assets at bankruptcy auction in April 2009 and liquidated 25 stores, keeping 31 open on a “going concern” basis.
