KANSAS CITY, Mo. -- Barring last-minute concessions by Food Barn's union, Associated Wholesale Grocers here expects to acquire the 40-store chain next week, according to papers filed in U.S. Bankruptcy Court.
AWG has offered $70 million to acquire the assets of the remaining Food Barn stores here and in neighboring areas of Missouri and Kansas, according to the court papers.
The deal, however, is subject to court approval following a Feb. 24 hearing. It also can be terminated if Food Barn wins concessions from its labor union prior to the hearing date.
As of late last week, however, no negotiations were scheduled.
Food Barn filed for Chapter 11 bankruptcy protection in January 1993. It cited a 15-week strike by a local of the United Food and Commercial Workers union as a major factor in its downfall.
Industry sources speculate
that if AWG successfully acquires the Food Barn stores, most of the stores would become nonunion under independent owners. With the exception of Food Barn, fully unionized grocers have vanished from the regional market here.
AWG is a cooperative wholesaler supplying about 700 stores in the Midwest, 200 of which are in the Kansas City area. The cooperative claims a 55% share of the Kansas City market, primarily through its Price Chopper super warehouse format.
Under the terms of AWG's agreement with Food Barn, the wholesaler would pay $41 million for Food Barn's operating assets, $18 million for inventory, $1.9 million for accounts receivable, $3.2 million for assumption of a transportation lease and $5.6 million for release of funds due AWG dating from their original supply agreement in 1992. Court documents disclosed that "for the right to supply Food Barn," AWG paid $7.25 million in cash to the retailer, to be paid back over seven years. Operating assets to be transferred to AWG include furniture, fixtures and supplies, but not the leases of the stores.
The motion to approve the agreement states that the cash that has to be paid by AWG "exceeds all other offers received." It was said that Food Barn's chief financial officer had spoken to eight of 10 parties who expressed interest in the firm's assets, according to the court papers. Anyone interested in submitting a higher bona fide offer can do so at the Feb. 24 hearing, the papers said.
Meanwhile, negotiations between Food Barn and Local 576 of UFCW have broken off. Food Barn steadfastly has contended that it cannot reorganize without concessions from the union.