As expected, U.S. Bankruptcy Court Judge Kevin J. Carey officially declared that C&S Wholesale Grocers was the highest bidder at the recent auction to acquire the assets of Associated Wholesalers, Inc. (AWI), the Robesonia, PA-co-operative wholesaler and its sister wholesale firm White Rose. The affirmation announcement was made at a hearing held in Wilmington, DE on October 29.
The winning bid was valued at $288.1 million (of which $5.4 million was carved out when it was agreed that AWI will retain its Co-Op Insurance agency and several real estate properties). It was also revealed that at the auction, which was held on October 24 and 25 at Saul Ewing LLP’s (AWI’s attorney) office in Philadelphia lasted 15 hours and 23 rounds between the two authorized bidders – C&S and Supervalu. Supervalu’s final bid was $284.6 million.
The Keene, NH-based privately-held wholesaler’s final bid was approximately $95 million more than its original “stalking horse” offer.
Saul Ewing’s Mark Minuti, the lead attorney in the courtroom, declared that the process yielded a “tremendous result.” He added that in addition to the increased price, other improvements were agreed upon that would enhance the acquisition for all parties.
Also testifying at the two hour hearing was Doug Booth, a partner in investment advisory and merchant banking firm Carl Marks Advisors, who has been serving as chief restructuring officer for AWI during the Chapter 11 process. Booth noted that once the secured lenders are paid, there would be approximately $85 million in cash available that will be targeted for claims related to administrative expenses, creditor set-off claims and Section 503 (b)(9) issues. Section 503 (b)(9) of the U.S. bankruptcy code allows vendors to assert an administrative expense claim for the value of goods sold and delivered to, and received by, a customer in the ordinary course of business within 20 days of their customer’s bankruptcy filing.
A November 7 hearing is scheduled to presumably settle final matter and the acquisition is expected to close on November 11.
Until the transaction closes, AWI and White Rose will continue to operate independently of C&S. AWI stated that both the White Rose and AWI businesses intend to continue operating in the ordinary course of business.
Matt Saunders, president and CEO of AWI said, “We are pleased to receive court approval for the sale of AWI and White Rose to C&S. The auction process was robust and competitive and we believe that the winning bid from C&S is in the best interest of AWI and its stakeholders. C&S shares AWI’s commitment to providing customers and independent stores great deals on products and on helping them grow their businesses. AWI will further enhance C&S’s position as the leading wholesale grocery supply company and we look forward to completing the sale. I would like to thank AWI and White Rose employees whose continued hard work and dedication enabled us to move through this process.”