WAYNE, N.J. -- Grand Union Co. here last week received the latest portion of an infusion of capital from an investment group and said its chairman, Roger E. Stangeland, will personally purchase $3 million of preferred stock.
The injection of capital is expected to facilitate a number of projects that are getting closer to completion, the company said. Grand Union received the capital by concluding the sale of $20 million worth of 8.5% Class A convertible preferred stock to its investment group, which includes affiliates of Shamrock Capital Advisors, General Electric Pension Fund and the Roy E. Disney family.
The purchase brings the group's total to $60 million in preferred stock, with another $40 million worth of purchases planned. Subsequent $20 million buys are scheduled for Aug. 25, 1997, and Feb. 25, 1998.
Stangeland said he will purchase 60,000 shares of the same preferred stock for $3 million. The deal, pending approval by the board and other entities, is expected to be completed on March 10.
"Since becoming chairman of the board in June 1995, I have committed substantial time and energy to working with Joe McCaig, the company's president and chief executive officer, and the rest of the management team in developing and executing an overall strategic plan for Grand Union," Stangeland said. "I am now reinforcing my commitment and belief in Grand Union and that plan with a significant cash investment from my own personal resources."
Last summer, Grand Union agreed to sell $100 million of its preferred convertible stock to Shamrock, giving the equity investment firm a majority stake in the company in order to further Grand Union's ambitious three-year, $225 million capital plan, which covers 83 of its 226 supermarkets.
The move was seen by some industry watchers as a way to resurrect an established but cash-poor company. Two-thirds of the stores targeted for improvements are in the New York City market. The chain also operates in New York State, New Jersey, Connecticut, Pennsylvania, Vermont and New Hampshire.
The company added that Louttit left the company to pursue other opportunities and that it will eventually name a successor. Until then, the key marketing and merchandising functions that Louttit supervised will be reported to Joseph J. McCaig, president and CEO.
Louttit, 50, had been with Grand Union 32 years. He is the second high-ranking chain executive to leave the company in recent months, following the resignation of chief financial officer Ken Baum last September.
Trade observers told SN they were surprised by both departures and said they thought the changes may be a delayed reaction by the company's key investors following Grand Union's emergence from Chapter 11 in mid-1995.
One securities analyst said he was caught off-guard by Louttit's resignation, "given the fact both he and McCaig have been at Grand Union over 30 years apiece and seemed to complement each other at the management level. However, the change may reflect some turmoil within the company following the change in ownership and the disappointing results Grand Union has posted in the last year and a half."
Another analyst said company officials have assured him that the two departures are coincidental and unrelated to the desires of the chain's equity owners.
A third analyst said he expects more "old-timers" to leave on a gradual basis "as a normal part of the company's transition."
A large part of Grand Union's transition can be seen in several capital projects that are nearing completion.
Four renovations, in Closter, N.J. and Pawling, Elsmere and Glenmont, N.Y., will follow Grand Union's "M.A.S.T.E.R.S." concept, which stands for "maximize all space, totally expand the right stuff." These are scheduled to be completed in March and April, McCaig said.
Other projects include the following: · Two replacement stores are under construction in Dumont, N.J., and Schroon Lake, N.Y., and are scheduled to open this spring.
Two incremental stores are under construction in Southbury, Conn., and Franklin Lakes, N.J. They are scheduled to open this summer.
The company's Sayville, N.Y., store is currently being enlarged from 23,100 square feet to 42,000 square feet. It is scheduled to be completed this spring.
In addition, blueprints have been finalized for the next three M.A.S.T.E.R.S. renovations, and those projects will commence shortly, McCaig said.
All of the current undertakings, which are "about on time," represent the largest number of projects under way simultaneously in years, said a company spokesperson.
The M.A.S.T.E.R.S. concept is designed to boost the number of products and varieties in-store, the company said, thereby pushing sales and sparking customer satisfaction.
The plan also includes better category management, competitive pricing and stronger produce and prepared-meals sections. About 50 of Grand Union's most successful stores were targeted for the upgrade, the company added.