JITNEY UNITS AUCTIONED, COMPANY SET TO SHUT DOWN

ELLIOT ZWIEBACH

JACKSON, Miss. -- Jitney Jungle Stores of America here said it is preparing to shut down permanently following a bankruptcy auction last week to sell off its 137 stores.

Jitney has been operating as a debtor-in-possession since filing for Chapter 11 bankruptcy protection in October 1999.

The auction, held in New Orleans, formalized the sale of stores to Winn-Dixie Stores, Jacksonville, Fla., and Bruno's Supermarkets, Birmingham, Ala. -- transactions that were announced early in November but not completed until last week's auction. However, SN learned that Bruno's acquired more than the 17 stores originally announced, and Winn-Dixie bought fewer than the 72 stores originally announced, reportedly because of Federal Trade Commission issues.

Others who reportedly bought stores included Fleming, Dallas; Brookshire Bros., Lufkin, Texas; and several independents.

Jitney officials could not be reached late last week for comment.

The asset sales were scheduled to be confirmed at a hearing in U.S. Bankruptcy Court in New Orleans last Friday. Ron Johnson, chairman and chief executive officer, told SN before the auction that Jitney was hoping to have approval from the FTC for the Winn-Dixie and Bruno's sales before the court hearing.

Johnson said the stores that were sold will be turned over to their new owners early next year, following the Christmas and New Year's holidays. "We already have a schedule worked out for the first three weeks of January where we'll take physical inventories and then formally turn the stores over to the buyers," he said.

Jitney plans to form an administrative team "to wrap it all up" once the stores have been transferred, Johnson said. The team, which is scheduled to begin work on either Jan. 20 or Jan. 27, will tie up human relations issues, asset dispositions and various administrative issues before Jitney Jungle ceases operations, he explained.

Although the team members have not yet been selected, Johnson said he will not be part of the group. He told SN he plans to take two or three weeks off, "then go out and find another job."

Over the last five years Johnson has been involved in the sale or liquidation of three companies. He joined Kash n' Karry, Tampa, Fla., following its emergence from Chapter 11, and oversaw its sale to Food Lion (now Delhaize America), Salisbury, N.C. He presided over the bankruptcy of Farm Fresh, Norfolk, Va., which was sold to Richfood, Richmond, Va. (now part of Supervalu). Now, he is running Jitney Jungle through its liquidation.

When Jitney filed for Chapter 11 protection 14 months ago, the company had hoped to sell off a number of stores and restructure around a core group that would become part of a stand-alone public company, Johnson told SN. But when buyers could not be found, the financial institutions that owned the company's debt decided to liquidate the company, he explained.

Asked what factors contributed to Jitney's ultimate demise, Johnson told SN it was a combination of the debt resulting from its leveraged buyout in 1996, plus the acquisition of the Delchamps chain in 1997, which doubled the debt.

"At the end of the day, we acquired some wonderful stores, and with about half the Jitneys and half the Delchamps performing well, we had the makings of a great chain," Johnson said. "But the high debt was a problem, and that problem was made worse by 140 new competitive openings in the last three years."

Jitney Jungle was founded in 1919 and remained a private company until 1996, when it was acquired for $373 million by Bruckmann, Rosser, Sherrill & Co., a New York-based investment firm. At that time, the company operated 104 stores in six states (Mississippi, Alabama, Tennessee, Louisiana, Arkansas and Florida), with sales of $1.2 billion.

In 1997, Jitney acquired Delchamps, a Mobile, Ala.-based chain with 118 stores in the same six-state area, with sales of approximately $1.1 billion.

In May 1999, under Michael E. Julian, Jitney chairman, the company disclosed plans to seek a strategic partner for a merger.

A month later, Julian left the company and was succeeded by Johnson, who said the company was reconsidering its decision to pursue a merger. Four months later, Jitney filed for Chapter 11 protection.