WILMINGTON, Del. — Fresh & Easy Neighborhood Market owes its parent company, Tesco, $738 million stemming from intercompany loans provided to fund the company’s rapid rollout, Fresh & Easy reported in its Chapter 11 bankruptcy filing on Monday.
Tesco is the chain’s single largest creditor. Fresh & Easy does not have any other credit agreements with banks, but it owes about $18.4 million to vendors for goods and services.
Fresh & Easy also had annual lease obligations totaling about $72 million for its stores in California, Nevada and Arizona, the company said. Of the 167 stores currently in operation, 25 sites are owned by Fresh & Easy, 50 are ground leases and 92 are store leases. In addition, Fresh & Easy owns 61 store locations that are not being operated, and is party to leases for 36 non-operating store locations (six ground leases and 30 store leases).
In the filing, Fresh & Easy said that although it was successful on some fronts — it has about 2.6 million loyalty-club members, and a successful private-label program for example — it was “unsuccessful in obtaining a sufficiently broad customer base.”
“As a result, Fresh & Easy incurred operating losses each year since 2006,” the company said in the filing. In its latest fiscal year, it generated losses averaging $22 million per month.
During its efforts to sell the company, Fresh & Easy said it received 16 “preliminary indications of interest” in acquiring parts of the company, and four indications of interest for the whole company, which also includes a warehouse and production facility in the Riverside, Calif., area, and an unused warehouse in Stockton, Calif.
As previously reported, Fresh & Easy reached an agreement to sell 150 stores and the Riverside warehouse and production facility to Yucaipa Cos. That acquisition will now take place through the bankruptcy auction process. The auction, with Yucaipa as the lead bidder, is scheduled for Nov. 11.
“Today's filing is simply the next step in the restructuring process to sell the business to Yucaipa Cos. and will have no impact on our customers’ shopping experience,” a Fresh & Easy spokesman told SN. “It’s business as usual as we continue the transition to new ownership.”
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