Chesterton Tribune

 

 

Jewel says no plans to close Strack stores

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By KEVIN NEVERS

Jewel-Osco is saying that it has no plans to close any of the 19 Strack & Van Til grocery stores which it would acquire under a $100-million asset-purchase agreement with the stores’ majority owner, the bankrupt Central Grocers Inc. of Joliet, Ill.

“Jewel-Osco does not expect to close any store locations as a result of the transaction, pending the outcome of the court-supervised sale process and customary regulatory approvals,” Jewel-Osco said in a statement released this morning to the Chesterton Tribune.

One of the 19 Strack & Van Til stores in question is located at 1600 Pioneer Trail in Chesterton, roughly one and half miles from Jewel-Osco’s store at 747 Indian Boundary Road.

Jewel-Osco also said that it “intends to extend offers of employment to substantially all of the current store employees as part of the transaction.”

Jewel-Osco, a subsidiary of Albertson’s Inc. with 182 groceries in Illinois and Iowa but only four in Indiana, is looking to “expand the Jewel-Osco footprint further into Indiana,” the statement said.

“We are excited to have the opportunity to grow the Jewel-Osco brand in the Midwest and welcome the Strack & Van Til teams at those 19 stores into our Jewel-Osco family,” said Doug Cygan, Jewel-Osco division president. “Our two companies share a rich history of serving customers in the Midwest as well as core beliefs in working hard to serve customers and deliver value every day on the finest quality fresh foods and local products.”

Under the asset-purchase agreement, Jewel-Osco would also acquire the Strack & Van Til stores at 2800 Calumet Ave. and 2168 W. U.S. Highway 30 in Valparaiso; and the Town & Country stores at 1605 Calumet Ave. in Valparaiso and 6046 Central Ave. in Portage.

On Saturday, in a filing with the U.S. Bankruptcy Court for the District of Delaware, Central Grocers announced that it has entered into a “stalking-horse agreement” with Jewel-Osco, which has submitted a bid of $70 million for the 19 Strack & Van Til stores, plus $30 million for their inventory.

Stalking-horse agreements are used by debtor companies to establish a minimum acceptable bid at auction. In exchange for the stalking horse’s entering into such an agreement, a debtor company undertakes to offer the stalking horse certain protections. Specifically, under its agreement with Jewel-Osco, Central Grocers will do the following if another party out-bids Jewel-Osco in an auction scheduled to begin June 2:

¥Pay Jewel-Osco a “break-up fee” equal to 3 percent of the purchase price of the stalking-horse package.

¥Reimburse Jewel-Osco up to $500,000 for “reasonable and documented costs and expenses incurred” in connection with the agreement.

Strack & Van Til is the largest employer in Northwest Indiana, with a workforce of 4,250 and a monthly gross payroll of $8 million. It has total assets (book value) of $183 million and total liabilities of $141 million, with annualized sales in 2016 of $905 million, or about 51 percent of Central Grocers’ sales volume last year.

Last week, in its initial Chapter 11 petition, Central Grocers puts its total assets (book value) at $262 million but its total liabilities at $232 million. The company attributed its bankruptcy to a combination of factors, including online competition and “innovative companies focusing exclusively on food delivery”; consumers’ changing tastes and demand for a “gourmet” shopping experience; and plummeting food prices which have prompted grocery retailers to engage in “aggressive price wars.”

 

 

Posted 5/16/2017

 
 
 
 

 

 

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