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LOS ANGELES -- Smart & Final Inc. today reported it has completed the previously announced divestitures of its foodservice direct delivery business units and its Florida stores, to reposition the company's focus on its core western U.S. store operations.
Gordon Food Service purchased the Florida foodservice direct delivery and stores businesses, and Sysco Corp. purchased the northern California foodservice direct delivery operations. In addition, Smart & Final's northern California meat processing and distribution business was sold to Pacific Fresh Sea Food Company.
The sales generated total cash proceeds of approximately $59 million and buyers' assumption of approximately $25 million in future operating lease obligations. From the cash proceeds, the company reduced the balance outstanding under its revolving credit facility, and the corresponding lender commitment amount, by $42 million. In addition, $14 million is being held in the company's real estate lease trust for acquisition of replacement properties or later reduction to the lease facility debt. A total of $4 million of cash proceeds is being held in escrow for later settlement of closing valuation matters.
"We're doing exactly what we said we would do when we began our restructuring efforts earlier this year," said Ross Roeder, Smart & Final chairman and c.e.o. "By refocusing Smart & Final on our core western U.S. store operations, we are positioning the company for substantially improved future performance, and we are taking important steps to improve our financial strength. At the same time, we have created a favorable outcome for our employees and customers. We are particularly pleased that the transactions preserved employment for over 700 of our associates."
Roeder further noted that Smart & Final's western U.S. stores continue to perform well and are positioned to benefit from current industry trends: "We've seen strong comparable store growth in both our store formats: Cash & Carry wholesale stores and our Smart & Final warehouse stores. In the first half of 2003, western U.S. comparable-store sales increased 3.9 percent over the same period of the prior year. We believe that this is among the strongest growth in food retailing.
"Several factors are driving that growth," Roeder added. "First, although we now have exited the direct delivery business, we continue to serve foodservice customers through our stores. As direct delivery companies raise their minimum order requirements, we are seeing an increase in the number of restaurant and other foodservice customers shopping in our stores. I don't foresee that trend changing as the economy recovers."
Founded in 1871 in downtown Los Angeles, Smart & Final Inc. operated 228 no-membership warehouse stores for food and foodservice supplies in California, Oregon, Washington, Arizona, Nevada, Idaho, and northern Mexico at the end of the 2003 second quarter.