Bashas’ rejects $260 million buyout offer by Albertsons

Arizona chain’s creditors say they were kept in dark about overture

By Bob Christie

THE ASSOCIATED PRESS

PHOENIX — Arizona gro­cery chain Bashas’ Inc., which is working to emerge from bankruptcy protection, has rejected a buyout offer of at least $260 million from ri­val Albertsons LLC.

Albertsons CEO Ralph Miller sent a letter including the offer to Bashas’ chairman Eddie Basha Jr. this month. It was revealed in a filing in U.S. bankruptcy court by lawyers representing Bashas’ lenders.

The lenders’ filing says Bashas’ hadn’t disclosed it had been approached by Al­bertsons until the letter forced its hand.

The offer was deemed in­sufficient and the company is on track to emerge from bankruptcy in April, Bashas’ attorney Michael McGrath said Wednesday.

“We had no idea what Al­bertsons’ proposal was,” Mc­Grath said. “They talked about a payment, but they gave us no terms, whether it was cash, or stock, or pay­ments over time.” Albertsons LLC is a pri­vately owned chain that oper­ates nearly 230 stores in Ari­zona, Arkansas, Colorado, Florida, Louisiana, New Mex­­ico, and Texas. It was created to acquire stores considered underperforming when a group led by SuperValu Inc. bought Boise, Idaho-based Albertsons Inc. in 2006.

Family-owned Bashas’ was stung by the national credit crisis, slowing growth and the hyper-competitive Phoenix­area grocery market. It filed for a planned Chapter 11 bankruptcy reorganization in June.

The Chandler-based company closed 31 of its more than 155 stores, laid off about 1,000 workers and negotiated store leases to cut costs. Besides Bashas’ stores, the company oper­ates Food City, which caters to Hispanic shoppers, and high-end grocer AJ’s Fine Foods. All but a handful are in Arizona.

The company filed a reor­ganization plan last month that would allow the family to maintain equity and repay creditors over a period of years.

The company now has about $271 million in liabili­ties, not including claims arising from leases it broke during store closings and other items, McGrath said. Included is an estimated $60 million owed to ven­dors, $110 million to banks and $86 million to bond­holders. Its assets are esti­mated at $386 million.

The Feb. 5 Albertsons let­ter to Bashas’ top executive said the companies had meetings and discussions over the past year about combining the two compa­nies. After the bankruptcy filing, Bashas’ management asked for the talks to be de­ferred until the company emerged from bankruptcy.

Albertsons’ Little wrote that the company was “pre­pared to offer between $260 (million to $)290 million of value” for the vast majority of Bashas’ assets. It called the offer a “substantial pre­mium” to that shown in the reorganization plan the company submitted and said it had hired Credit Su­isse Securities as a financial adviser and outside legal counsel to pursue the deal.