SLOAN'S: RED APPLE DEAL POSSIBLE SOON

RUSSELL REDMAN

NEW YORK -- Sloan's Supermarkets here could complete plans to acquire the privately held Sloan's and Gristede's stores here by the early part of next year, according to John Catsimatidis, chairman and chief executive officer.

If the deal goes through, Sloan's would become the largest supermarket chain in Manhattan, Catsimatidis said at an American Stock Exchange forum here Nov. 15. "We're working on it right now. It could be by the first quarter of next year," he said.

Sloan's, a public company, operates 14 supermarkets in Manhattan. It now is in the process of acquiring the Sloan's and Gristede's supermarkets operated by Red Apple Group, a private company owned by Catsimatidis, its chairman and CEO.

Red Apple has 42 stores, and Sloan's expects to acquire about 36 of them, Frederick Selby, a Sloan's board director who handles its investor relations, told SN. "About five or six [of the 42 units] will be closed or sold elsewhere, but that's not certain yet," he said.

Catsimatidis currently is making road-show presentations to potential institutional investors to raise $35 million to $40 million for a bond issue that would enable Sloan's to buy the privately held stores, according to Selby.

The private stores would be paid for through a private placement of the bonds, which would enable Catsimatidis to get a return on his investment in the private stores and then to merge the private and public companies, Selby said. The $35 million to $40 million target stemmed from a neutral third-party evaluation of the stores' worth, he said.

Answering audience questions at the AMEX forum, Catsimatidis estimated that Sloan's total sales would be between $170 million and $200 million if the merger is completed.

He also discussed potential growth plans in the New York City area, where Sloan's competes with Food Emporium, a chain owned by A&P, Montvale, N.J., and D'Agostino Supermarkets, Larchmont, N.Y. He said Sloan's would build on its strength of proximity, noting that 90% of its shoppers are within a four-block radius of its store locations and that 75% of Manhattan residents don't own cars.

"We plan to stay in the New York metro area and to stay and grow in areas where our customers shop within a four-block radius. The New York City market is a $10 billion market. There is enough there for us to grow in," Catsimatidis said, adding that stores would operate under the Sloan's and Gristede's banners.

"Our strategy is to increase our stores in Manhattan," he explained. "There's a lot of room to grow in upper Manhattan, into Brooklyn, and we also have a Westchester operation. We are going to chase the affluent areas of Westchester where Food Emporium is. Where Food Emporium is, we're going to be."

Catsimatidis estimated that, if the pending acquisitions are completed, the merged company would have capital expenditures of $5 million to $6 million a year for three to five new stores and about eight remodels. In other news, Red Apple, Sloan's and Catsimatidis have applied for Federal Trade Commission approval to divest a Gristede's store in New York's Greenwich Village section to White Rose Food, Carteret, N.J.