ALMACS CHAPTER 11 PROPOSAL WOULD GIVE UNION 20% STAKE

PROVIDENCE, R.I. -- Almacs Supermarkets has filed a proposed reorganization plan and a related disclosure statement here in U.S. Bankruptcy Court for the District of Rhode Island that would give union employees a 20% ownership stake in the company.

m Chapter 11 "a stronger, more viable competitor."

Almacs, based in East Providence, filed for Chapter 11 bankruptcy protection last August. Since then it has been operating what Ireland called "a profitable core of 26 stores" in Rhode Island and southeastern Massachusetts -- down from 43 units before the filing.

If the union ratifies the proposed agreement and the court approves the disclosure statement, the company will seek formal acceptance of the plan by its creditors, Ireland said.

If enough creditors approve the plan, Almacs will seek to have the bankruptcy court confirm it -- the final step before emerging from Chapter 11, Ireland noted.

Adoption of the reorganization plan is contingent on ratification of a new three-year collective bargaining agreement by Almacs' approximately 2,200 unionized employees, who are members of United Food and Commercial Workers Union Local 328.

"Almacs needs a significant reduction in labor costs to be a viable competitor post-reorganization," Ireland said. "We have developed a proposal to the union that will enable us to realize those savings, and it will also provide our unionized workers with a stake in the future success of the reorganized Almacs."

Besides an employee stock ownership plan that would give union members a 20% stake in the company, subject to dilution, the agreement includes a $1.5-million buyout program to encourage early retirement; conversion of fulltime workers to parttime status; a 17.5% reduction in wage and benefit rates; a profit-sharing plan, and union representation on the company's board of directors.

Ireland said the company is continuing to work with Local 328

officials to present terms of the proposed bargaining agreement to the membership.

For creditors, the terms of the reorganization include:

Bondholders and lenders would agree to extinguish $104 million in debt obligations, in return for 80% of the common stock of the reorganized company, subject to dilution.

Supervalu, the chain's primary supplier, would agree to receive a five-year note bearing interest at 7.5%, payable in kind for two years, plus other considerations.