Tops Bids $85M for Penn Traffic

MARK HAMSTRA

WILLIAMSVILE, N.Y. — As expected, Tops Friendly Markets here said it has filed a bid to acquire a majority of the assets of Penn Traffic Co., Syracuse, N.Y., out of bankruptcy, although rival bidder Price Chopper voiced strong objections to the proposed sale in a court hearing.

In a filing with the bankruptcy court, Penn Traffic said Tops' bid included $85 million in cash; reductions in unsecured claims that had been filed against Penn Traffic by United Food and Commercial Workers Local 1 and C&S Wholesale Grocers; and assumption of Penn Traffic liabilities. Those liabilities were reported to be about $70 million.

Tops bid on all 79 stores, although it said some would be shuttered after the sale.

In the filing, C&S said it would reduce its claim against Penn Traffic from $65 million to $25 million, and the union and its affiliates would eliminate their claims of about $72 million. Penn Traffic and Tops are both supplied by C&S, and both employ UFCW workers.

A previous offer by Schenectady, N.Y.-based Price Chopper to buy 22 of Penn Traffic's stores for $54 million is also under consideration by the court, along with a liquidation offer for the remaining stores. According to a report by the Syracuse, N.Y., Post-Standard, an attorney representing Price Chopper at the court hearing repeatedly objected to the way Penn Traffic conducted the sale to Tops, and claimed that the bankrupt company should be bound to honor its agreement to sell the 22 stores to Price Chopper.

“It's very rare that you get two excellent strategic bidders bidding against each other,” Burt Flickinger III, managing director of Strategic Resource Group, New York, told SN. “Price Chopper's bid is excellent, on a bifurcated basis,” he added, although he noted that other considerations might make Tops' bid more appealing.

Tops, which was spun off by former parent Ahold to private equity in 2007, currently operates 71 supermarkets, mostly in western New York, and franchises another five locations. Bank of America Merrill Lynch and Morgan Stanley are financial advisors to Tops in this transaction. The court is expected to rule on the bids Jan. 25.