The Wall Street Journal reports that Fairway Group Holdings, one month into bankruptcy protection after a 2013 IPO and aggressive expansion plan didn't turn out the way it hoped, "won court approval on Tuesday for a reorganization plan that will cut its debt load in half," and would allow the 15-store, New York-based chain to emerge from bankruptcy in two weeks.
According to the story, "The restructuring plan cuts Fairway’s funded debt by $140 million and leaves it with about $50 million in cash to help maintain operations while it works to get back on its feet. All of the company’s 4,000 employees will keep their jobs, and Fairway won’t change collective-bargaining agreements for its unionized workers ... With its balance sheet restructured and debt payments cut by as much as $8 million annually, Fairway says it expects to have enough money for investments in new technology and marketing campaigns that will help it compete."
The story says that Fairway's senior lenders will take the company private, getting ownership in exchange for what they are owned. Other creditors will be repaid, and existing equity will be "wiped out."
According to the story, "The restructuring plan cuts Fairway’s funded debt by $140 million and leaves it with about $50 million in cash to help maintain operations while it works to get back on its feet. All of the company’s 4,000 employees will keep their jobs, and Fairway won’t change collective-bargaining agreements for its unionized workers ... With its balance sheet restructured and debt payments cut by as much as $8 million annually, Fairway says it expects to have enough money for investments in new technology and marketing campaigns that will help it compete."
The story says that Fairway's senior lenders will take the company private, getting ownership in exchange for what they are owned. Other creditors will be repaid, and existing equity will be "wiped out."
- KC's View:
-
One of the more interesting things in the story is the note that Fairway's owners tried to sell the company, reached out to more than 60 potential buyers, but was unable to hook anyone on the chain's potential and possibilities once its debt and other liabilities were taken into account.
I have to admit that I wonder how they identified 60 potential buyers. Did they just go on Google and look for anyone who sold food? Hard to imagine that there are 60 realistic, credible potential buyers for Fairway out there.
I hope that the new owners bring the company back to its merchant roots and give the stores some badly needed energy ... if indeed the goal is to keep all of them. I can't shake the notion that maybe a couple of them could still be sold off, albeit on a piecemeal basis.
