NEW YORK -- Sloan's Supermarkets here said it has signed an engagement letter with Barington Capital Group, a locally based investment banking firm, to raise up to $40 million to acquire about 35 area supermarkets from Red Apple Cos. here. Sloan's said two weeks ago it would acquire three stores from Red Apple, a holding company that owns supermarkets, real estate, a refinery and an airplane leasing company, in a separate transaction. Both Sloan's, a public company with 10 stores in Manhattan, and privately held Red Apple are chaired by John A. Catsimatidis. Red Apple's stores, all in Manhattan, operate under the Sloan's and Gristede's banners. Sloan's officials said the pending acquisition of stores owned by Red Apple is in keeping with Catsimatidis' desire to consolidate substantially all of his privately held food companies under the public company's banner. Sloan's said it hopes to raise the capital for the acquisition within 90 days. Valuation of the stores will be determined by an outside source, the company noted. The two transactions would create a chain of about 48 stores with a volume of $200 million to $250 million, including $50 million in sales from the publicly held Sloan's units and $150 million to $200 million from the privately held Sloan's and Gristede's stores, the company said. According to a Sloan's spokesman, the ultimate acquisition of stores from Red Apple could involve fewer than the 35 targeted stores if Red Apple opts to sell some units before the sale to Sloan's. Prior to the proposed acquisition, Sloan's had 11 publicly held stores; last week, it sold the lease on one of the 11 to Rite-Aid Corp., a drug store chain based in Camp Hill, Pa., leaving it with 10. The company said the $40 million it hopes to raise to make the acquisition would be in the form of debt or preferred stock, to be issued by the company to unaffiliated third parties.
Sloan's previously said it had received a commitment for an $8 million credit facility, with the funds being designated to acquire the three Red Apple stores, to refinance its $2.8 million debt and to establish a line of credit for working capital purposes.