BIG V CREDITORS FACE PURCHASE DECISION

MARTIN SCHNEIDER

FLORIDA, N.Y. -- Creditors of Big V Super Markets will soon face a major decision about the future of the company in the wake of a joint purchase offer last week by Stop & Shop Supermarket Co., Quincy, Mass., and Pathmark, Carteret, N.J.

In the coming months, creditors involved in the bankruptcy proceedings of Big V will have to decide between this joint offer and an earlier offer made by Wakefern Food Corp., Elizabeth, N.J., Big V's supplier.

The decision could involve considerations about antitrust issues and the size of an exit fee that a company acquiring Big V would have to pay Wakefern.

In last week's offer, Stop & Shop, a division of Dutch retailer Ahold, proposed acquiring 26 stores. As part of the joint plan, Pathmark would acquire nine stores for $71 million, plus the cost of inventory, while Stop & Shop would pay $184 million for the remaining 17 stores. If Big V's creditors accept the Stop & Shop plan, they would have to also accept the Pathmark offer, and vice versa, Faith Weiner, spokeswoman for Stop & Shop, told SN.

Both Ahold and Pathmark have previously made public offers to acquire Big V, Harvey Gutman, senior vice president, retail development, Pathmark, told SN. "We have explored Big V for many years, and are excited about the opportunity to obtain these nine stores by partnering with Stop & Shop."

Wakefern's plan, as previously reported, includes the purchase of 27 of Big V's 31 stores for $150 million and the assumption of undisclosed debt.

Industry sources told SN that Stop & Shop might have partnered with Pathmark to avoid intervention by the Federal Trade Commission. Weiner declined to comment on those speculations.

In 1999, Ahold scrapped a deal to acquire Pathmark because, according to industry speculation, the FTC was about to require the Dutch retailer to divest many of the Pathmark units.

Karen Meleta, spokeswoman for Wakefern, said Wakefern intends to continue operating Big V as an independent unit, retaining management staff and other high-level employees. She added that many of these employees would probably find themselves jobless if Stop & Shop's plan is accepted.

Meleta said, "We are confident that ours is the plan that is in the best interests of the creditors and the employees of Big V."

Also, Meleta noted that any buyer besides Wakefern would have to pay an "exit fee" to Wakefern, as a judge determined last summer that Wakefern was entitled to an unspecified sum if Big V, its largest distribution customer, was to leave the cooperative under any circumstances. This could nullify the value of any competing offer, Meleta said.

"As part of Stop & Shop's offer, $75 million serves as an exit fee," Meleta said. "We calculate the exit fee as being in excess of $300 million, a far cry from Stop & Shop's offer. But even if you subtract the $75 million from Stop & Shop's offer, the gap between their offer and ours is closed."

In addition, Meleta said Wakefern would also drop several unspecified monetary claims against Big V if its plan is adopted, further enhancing the value of Wakefern's plan. According to Michael Freitag, spokesman for Big V, a copy of both plans will be mailed to Big V's numerous creditors in late March. In the event that no consensus is reached by the creditors regarding a specific plan, a bankruptcy court judge will weigh the options and make a decision.

"Right now, it's really up to the creditors to figure out which plan will be approved," Freitag said. "There may be some alterations to both plans in order to get creditors to shift one way or another but, ultimately, their votes will decide the future, or it will have to go before the judge if there is not enough of a majority supporting either plan."