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In the wake of its Chapter 11 bankruptcy filing, Haggen's petition for $215 million in debtor-in-possession (DIP) financing from existing lenders to maintain operations has been given the green light.
The approval from the court states that the interim loan is "vital" for the preservation of the company as it reorganizes and likely radically downsizes, potentially to nearly its original 17-store count prior to buying 146 stores from Albertsons and Safeway following the close of the latter's $9.4 billion merger in 2014.
Haggen's 17 original stores remain profitable and are producing an estimated $25 million volume per location annually, according to published reports. In order to continue that trend, Haggen's filing indicates it will focus on shoring up its existing business by focusing on the original locations, along with a handful of the most productive from its newly-acquired sites.
As reported by The Seattle Times, "In a budget forecast filed in court, Haggen projects that weekly sales averaging $44.7 million in the next two months will fall by two thirds in mid-November. Similarly, its expenses for grocery inventory are expected to see a similarly sharp drop-off, from $24.5 million in the week ending Oct. 9 to $8.6 million the following week. Payroll expenses are also projected to decrease sharply in late October."
Further noting that in just three months, Haggen used $33 million of the $36 million available in its credit line, The Seattle Times story predicted $25 million in negative cash flow by the end of next week.
The full story can found here.