KINGS GOES BACK ON MARKET AS D'AGOSTINO'S EXCLUSIVITY ENDS

ELLIOT ZWIEBACH / Additional reporting: Samantha Conti

PARSIPPANY, N.J. -- Kings Super Markets here is still available.

Marks & Spencer Group Plc, Kings' London-based owner, said last week it was ending a period of exclusivity with D'Agostino Supermarkets, Larchmont, N.Y., after the chain was unable to come up with the $160 million asking price by Nov. 30.

In the wake of that development, the list of possible buyers for the 29-store Kings chain includes New York-based Gristede's; a management-led buyout group headed by Alan C. Levitan, Kings president and chief executive officer; C&S Wholesale Grocers, Brattleboro, Vt.; and possibly others. In addition, D'Agostino is still in the running, industry sources said.

According to a Marks & Spencer spokeswoman, "We're disappointed that the sale [to D'Agostino] didn't go through, but Kings is a profitable and well-run business so it's not an issue for us to hold on to it for the moment. But it's not part of our core business, so the eventual plan is to sell it, [and] we're now in the process of considering other options for the sale of Kings."

Nicholas D'Agostino Jr., chairman and CEO of D'Agostino, said his company ran into problems financing the deal in late October "when one of the sub-debt lenders, who had made a commitment to the deal, decided to pull out at the last minute, which put us in the embarrassing position of struggling to find a replacement. We think we'll have that hole filled in the next few days, and while we don't think it will be easy, we anticipate we will be successful in reaching an agreement with Marks & Spencer."

When Marks & Spencer agreed in late July to sell Kings to D'Agostino, D'Agostino said it hoped to complete the deal by mid-September with financial assistance from a bank consortium headed by GMAC Financial Services and GE Capital, a unit of General Electric Co. D'Agostino told SN last week that GMAC and GE Capital are still interested in participating in financing the deal.

He said he expects Marks & Spencer to make a deal to sell the stores "as soon as possible. It's very anxious to get the deal done."

Levitan said he also expects Marks & Spencer to try to close a deal quickly. "It's my sense Marks & Spencer still wants to sell the company, and now that it's rescinded its agreement with D'Agostino, that will be helpful in shortening the timetable," he told SN.

"While D'Agostino had exclusivity, everything else came to a halt. But that process is starting up again."

According to Levitan, several companies had tried to contact Marks & Spencer during the period when it was dealing exclusively with D'Agostino, "but the company did not respond to any of those calls because of the exclusivity agreement with D'Agostino. But those calls are being returned this week."

Levitan said he is still interested in acquiring Kings as part of a management-led buyout.

Gristede's also said last week it is back in the picture. "Our investment bankers are talking with Marks & Spencer's investment bankers," John Catsimatidis, Gristede's chairman, told SN last week.

However, he declined to say how those talks were progressing or what price Gristede's is willing to pay. Gristede's had been in discussions with Marks & Spencer about buying Kings last spring; however, a collapse in the bond market in April brought a halt to the company's efforts to raise funds to make the acquisition, and Marks & Spencer made a deal with D'Agostino instead.

Sources told SN they believe Gristede's might try to go back to the bond market and raise money by mid-January to finance the acquisition.

Industry sources also said C&S might be another potential buyer of Kings -- as a vehicle for re-sale to some of its independent customers -- albeit at a price closer to $130 million. C&S officials could not be reached for comment last week.

Kings, with sales of $513 million, operates conventional stores averaging 20,000 square feet and featuring upscale merchandise.

Marks & Spencer, which acquired Kings in 1988 for $110 million, has been looking for a buyer for the chain since September 1999 as part of its effort to dispose of its U.S. holdings.