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Putting an end to weeks of speculation in the local and trade press as to its interest in the bankrupt Penn Traffic Co.’s stores, Tops Markets, LLC said last week that a bid to acquire a majority of its fellow Northeast grocer’s assets, including its 79 supermarkets, has been accepted by the Syracuse, N.Y.-based company and recommended to the U.S. Bankruptcy Court for approval.
Williamsville, N.Y.-based Tops submitted a comprehensive bid that included cash as well as additional value created by substantial reductions in unsecured claims made against Penn Traffic by United Food and Commercial Workers Local One Pension Fund and C&S Wholesale Grocers. Tops offered $85 million in cash, with the elimination of about $100 million in unsecured claims against the company by UFCW Local One Pension Fund and C&S Wholesale Grocers, Tops communications/public relations manager Kate McKenna confirmed to Progressive Grocer.
The newspaper additionally reported that a ruling on the bid could come by early next week. The Golub Corp./Price Chopper, based in Schenectady, N.Y., has already offered to buy 22 of Penn Traffic’s stores for $54 million. Penn Traffic’s creditors favor the Tops bid, as it handily pay off the $52 million that the grocer owes to its secured lenders, The Albany, N.Y. Business Review reported.
“From the very beginning of our transition to a locally operated company, we have pledged to invest in the markets we serve, and to grow and strengthen our position as the largest grocery chain in the region,” explained Tops president and CEO Frank Curci. “This new opportunity allows us to further fulfill that pledge as we look forward to meeting the needs of our new neighbors and customers, providing them with a positive shopping experience that focuses on great variety, value and service.”
Founded in 1962, Tops returned local management and operations to its western New York base two years ago after being acquired by Morgan Stanley Private Equity from Ahold for $310 million. Since that time, the company has created over 140 new jobs at its headquarters, pumped more than $20 million into the local economy, and committed to a comprehensive $150 million capital improvement plan, with five stores renovated last year.
“Tops is very familiar with the localities served by Penn Traffic, and it is our goal to keep as many jobs and operate as many stores, without any interruption in service, as we possibly can,” noted Tops CFO Kevin Darrington. “We also plan to invest in those stores that are in need of upgrades in an effort to best serve our customers and associates.”
Bank of America Merrill Lynch and Morgan Stanley are Tops’ financial advisors in the deal.
In other Tops news, the expanding grocer last week reopened extensively renovated stores in Auburn and Cortlandt, N.Y. The 55,000-square-foot Auburn location now offers such features as new interior and exterior décor; improved floral, bakery and produce departments; an enhanced specialty cheese shop, and an overhauled carry-out café area, while the 77,000-square-foot Cortlandt store boasts larger selections of ethnic, chef-inspired, and natural and organic items, among other new attributes. Both stores now have a modern energy management system to reduce the electricity consumption of lighting and refrigeration programs.
Tops currently operates 76 full-service supermarkets — 71 company-owned and five franchise locations — and employs 10,000 associates in New York and Pennsylvania. Penn Traffic, which filed for Chapter 11 bankruptcy in November — its third bankruptcy filing in a decade — operates 79 P&C, Quality Markets and BiLo stores in New York, Pennsylvania, Vermont and New Hampshire, and employs almost 5,800 people.