Fresh and Easy supermarket. (Photo: Stock File)

Tesco's Fresh & Easy files for bankruptcy protection

UNITED STATES
Thursday, October 03, 2013, 05:00 (GMT + 9)

Fresh & Easy grocery chain has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court as a move in the restructuring process to complete its sale.

The grocery chain, which is indergoing the process of trading hands from its present owner, Tesco, to Yucaipa Companies LLC., cited debt of USD 500 million to USD 1 billion in its Monday court filing in Delaware, Los Angeles Times reported.

“Today’s filing is simply the next step in the restructuring process to sell the business to the Yucaipa Companies and will have no impact on our customers’ shopping experience,” according to Fresh & Easy's spokesperson Brendan Wonnacott.

“It’s business as usual as we continue the transition to new ownership,” he went on to say.

According to analyst Neil Saunders, the bankruptcy will let Fresh & Easy to shed unprofitable locations and have the flexibility to revamp its store portfolio. At present, about 170 shops are in active business.

Several analysts have stated that thanks to the filing Tesco will be able to back out leases before they conclude and auction off the brand's assets, which are worth USD 100 million to USD 500 million and that in turn, Yucaipa, through an affiliate, would then have the right to bid first for the chain in a November court auction.

James Dibbo, Fresh & Easy Chief Financial Officer, remarked today in an court-filed affidavit that “Many of Fresh & Easy’s leases are substantially above market, relative to its competitors. The effect of the real estate market was especially pronounced.”  

As a result of the move Tesco is predicted to spend the equivalent of USD 237.3 million on outlet closures and other expenses, including a loan of USD 126.6 million to the new firm, according to The Packer.

It has been reported that about 4,000 of Fresh & Easy’s more than 5,000 employees will keep their jobs. Yucaipa also acquires Fresh & Easy’s Riverside, Calif., distribution and production facility. 

Fresh & Easy has never been profitable to the largest retailer in the UK.

Related article:

- Tesco sells Fresh & Easy chain
 

By Gabriela Raffaele
[email protected]
www.seafood.media

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