It appears a new retailer with ambitious goals will be entering the Baltimore-Washington area as Mrs. Green’s Management Company has been authorized by the U.S. Bankruptcy Court to acquire five former Super Fresh (A&P) stores. Additionally, the Bankruptcy Court delayed its ruling on three other units that Mrs. Green’s successfully bid for at auction last month.
At the latest A&P Bankruptcy Court hearing on June 14 in White Plains, NY, Judge Robert Drain authorized Mrs. Green’s to complete the process to acquire Super Fresh stores in: Brunswick, MD; Cambridge, MD; Chestertown, MD; Baltimore City (Charles Street); and one unit in Washington, D.C. (48th Street).
Those stores, along with a Super Fresh unit in Lutherville, MD which was successfully bid on by Village Super Markets (ShopRite), were bundled as one package (“Lot 2”) at the auction, which was held on May 18 in New York. The winning combined auction bid for those six stores was $12.5 million. No other bids were submitted. Despite objections from several landlords and the United Food and Commercial Workers union, Judge Drain approved those bids.
A resolution on four other auctioned stores (“Lot 1”) located in Arnold, MD, Parkville, MD, Baltimore City (41st Street) and Silver Spring (White Oak), MD, was delayed to allow the landlord of the Parkville store (Regency Centers L.P.) more time to resolve its objection to the assignment of this unit to Mrs. Green’s. Arnold and the 41st Street location in Baltimore City are also slated to go to Mrs. Green’s, while the White Oak location is destined to become a Village-owned ShopRite. At the auction, court documents revealed that Mrs. Green’s and Village successfully bid $24.5 million for those four units, outbidding Giant/Landover (Ahold USA),which initially bid $18.5 million for the same four stores.
Additionally, the Bankruptcy Court approved the assignment of Super Fresh’s Ellicott City, MD unit to Supervalu (it is expected to become a Shoppers Food & Pharmacy) and allowed the landlord of the Westminster, MD Super Fresh, Englar Center LLP, to acquire that store in the shopping center the landlord owns.
Moreover, the court approved the selling of prescription customers lists for seven Super Fresh units to three parties – three lists to Walgreens, three to Safeway and one to CVS.
The aggressive price that Mrs. Green’s bid for the eight units came as a surprise to many industry observers. The company, which is based in Canada, currently operates 12 natural and organic grocery stores in Westchester County, NY and Fairfield County, CT and is a part of a Toronto headquartered hedge fund, Catalyst Capital Group. That group also controls Planet Organic, an Edmonton, Canada natural and organic grocer, and Richtree Market Restaurants, a six store group that operates restaurants in Ontario, Canada. Later this year, the consortium will open a unique 500 seat restaurant that is replacing the food court in an upscale shopping mall in Skokie, IL.
This will be an interesting test for the group, which doesn’t operate any stores in the 40,000 square foot range and has virtually no infrastructure or connection to the Baltimore-Washington market to draw from. It has signed a “recognition agreement” with the United Food and Commercial Workers union which is expected to provide opportunities to hire soon-to-be-displaced Super Fresh associates.
There is no timetable for when those stores may reopen (winning bidders will have access to their newly acquired supermarkets as early as July 7), but in the case of ShopRite, when it acquired nine existing South Jersey Stop & Shop stores in 2007, it took about two months to refurbish and restock those stores.
In related A&P news, the bankrupt retailer signed a new supply and logistics agreement with its current and principal wholesale supplier, C&S Wholesale Grocers, Inc.
A&P estimates the revised contract will generate a run-rate of more than $50 million in annual savings, which will be realized in cash beginning upon the retailer’s emergence from Chapter 11 pursuant to a plan of reorganization. A&P said it believes the new agreement will also help the chain generate cash savings in the near-term by significantly and immediately improving supply chain and operational efficiency, as well as provide the company with key service enhancements.
“The approval of this new supply and logistics contract with C&S will mark a key milestone for A&P as we move forward with our restructuring,” said A&P president and CEO Sam Martin. “The agreement will strengthen our existing relationship with C&S, as we work together to drive service delivery and reliability enhancements and substantial efficiencies across our operations. The anticipated annual savings will significantly reduce A&P’s cost structure upon emergence from Chapter 11, while ensuring consistent product availability in our stores and greater diversity of products for our customers.”
As part of the agreement, A&P will partner more closely with C&S to take advantage of its access to competitive rates from key manufacturers and producers, creating greater economies of scale and enhanced supplier relationships that position the company to further distinguish its product offerings in key categories. C&S supplies about 70 percent of A&P merchandise to its 361 stores that remain in Connecticut, New York, New Jersey, Pennsylvania, Delaware, and for a few more weeks, in Maryland and Washington, DC.