Albertsons LLC, the Boise, Idaho-based operator of Albertsons supermarkets in Arizona and seven other states, plans to pursue its efforts to acquire Bashas’ Inc. in bankruptcy court despite the Chandler company’s rejection of its bid.
“We believe that this is an exciting opportunity to combine the operations and become an even stronger grocer in the Arizona market and provide even greater value to our respective customers,” Albertsons said in a written statement.
But an attorney for Bashas’ called Albertsons’ $260 million to $290 million bid, made in a letter from Albertsons CEO Robert Miller to Bashas’ Chairman Eddie Basha Jr. early this month, “a nonstarter.”
Attorney Michael McGrath said Bashas’ is far along in negotiations with its creditors, and the bankruptcy judge has set a hearing to confirm the company’s own reorganization plan on April 6. If approved, the company could emerge from Chapter 11 shortly thereafter, he said.
Bashas’ plan promises to fully pay secured and unsecured creditors, although it could take five years, depending on the level of the company’s business after it emerges.
The 78-year-old family-run company, which owes at least $289 million, has been operating under Chapter 11 bankruptcy protection since July.
Albertsons’ hostile takeover bid could, however, throw a curve into the proceedings and set up a potential conflict if the Idaho company wins support from some creditors.
Unsecured creditors, including suppliers and vendors, support the company’s plan, but Bashas’ secured creditors, including lenders Wells Fargo Bank, Bank of America, Compass Bank and a group of insurance companies led by Prudential, have been noncommittal so far.
McGrath said the lenders want to see how well the business performs in Chapter 11 and what its prospects look like after it emerges.
“That takes time,” he said, but he said the company is making progress in negotiations with the lenders and hopes to have a consensual plan ready for the judge on April 6.
Bashas’ and the unsecured creditors’ committee rejected the Albertsons bid because it was vague and did not appear to pay all of the creditors in full, McGrath said. Also he said it did not appear to be in the best interests of Bashas’ employees because of possible layoffs. And he said there could be interruptions in relations with vendors, many of them Arizona companies such as Shamrock Farms that have done business with Bashas’ for decades.
Albertsons spokeswoman Christine Wilcox said the Idaho company wants to “make the best offer we can for the benefit of the many stakeholders, including staff in their stores and distribution operations as well as their general office.”
She declined to compare the value of the Albertsons offer with the Bashas’ reorganization plan, saying that is for Bashas’ to determine.
Albertsons officials believe the combination of the two companies would create operating advantages that would make the merged company a strong competitor in the Arizona market, Wilcox said.
“Overall, we feel that Bashas’ locations are a strategic fit with our geographic store base in Arizona,” she said. “We believe that by purchasing these stores we can save jobs and provide a great shopping experience to customers in the areas where Bashas’ stores are located.”
Wilcox said it’s too early to speculate about all that could happen if Albertsons succeeds, including if any stores would be closed, if the Bashas’ name would be dropped and what the status of Basha family members would be.
“We would welcome the opportunity to speak to the knowledgeable Bashas’ team to determine the best strategy going forward,” she said.