Fresh & Easy Neighborhood Market Inc., the U.S. supermarket chain owned by Tesco Plc (TSCO), won court approval of procedures for a Nov. 19 auction with the lead bid from an affiliate of billionaire Ron Burkle’s Yucaipa Cos.
U.S. Bankruptcy Judge Kevin J. Carey, at a hearing today in Wilmington, Delaware, said he would approve guidelines that will govern the proposed sale, which would save about 4,000 employees’ jobs.
All potential buyers must submit an offer by Nov. 15. The company would hold the auction if it receives a competing qualified bid, followed by a Nov. 21 hearing to seek court approval of the auction winner.
Under the proposed deal, a Tesco affiliate would lend the Yucaipa unit $120 million to help fund the acquisition, according to court papers. Tesco would get warrants to buy as much as 10 percent of the equity in the reorganized chain. Fresh & Easy would get 22.5 percent of the equity in the reorganized chain if the Yucaipa affiliate’s offer prevails.
The Yucaipa buyer also has offered to take on some of Fresh & Easy’s liabilities. The liabilities are valued at about $130 million in court papers and may exceed $200 million, according to Lisa Laukitis, a lawyer for Fresh & Easy.
Yucaipa has agreed to take over about 150 of the markets along with its production facility in Riverside, California, where the company produces meals under the Fresh & Easy brand. The company operates 167 stores in the western U.S.
