Dive Brief:
- KB US Holdings, the parent company of East Coast supermarket chains Kings Food Markets and Balducci’s Food Lover’s Market, has entered Chapter 11 bankruptcy, according to a press release.
- The grocer has accepted a stalking horse bid from TLI Bedrock, which intends to purchase the company for $75 million. The company will solicit “higher and better” bids from other potential suitors as part of the bankruptcy proceedings.
- KB has secured a commitment for approximately $20 million in debtor-in-possession financing from its existing secured lender, which it will use in conjunction with the cash it brings in from its operations to help it keep running during the sale process.
Dive Insight:
KB’s decision to reorganize through the Chapter 11 bankruptcy process puts it in the company of other regional and specialty grocers that have run into financial difficulties during 2020. The company joins grocers like Fairway Market, Lucky’s and Earth Fare, all of which went into bankruptcy earlier this year, setting the stage for other companies to acquire their assets.
Kings, which operates 25 supermarkets in New Jersey, New York and Connecticut, focuses on grass-fed local beef and “the purest fish in the world,” according to its website. The chain, which has been shifting toward local, natural and organic meat producers, recently made headlines for distributing cards with CEO Judith Spires’ personal mobile phone number to customers who refuse to wear masks in its stores.
Balducci’s, which traces its roots back to 1916, when it was established as a vegetable pushcart in New York City, operates gourmet supermarkets in New York, Connecticut, Maryland, and Virginia. The company opened a Blossom Bar at its Manhattan location last year in partnership with Repeat Roses.
As a stalking horse bid, the offer for KB from TLI Bedrock sets the stage for other potential suitors to emerge during the bankruptcy process. That could allow KB to fetch more than the $75 million offered by TLI Bedrock, but it could also cause the company’s assets to be split up.
Like KB, Fairway Market, which sputtered after attempting to duplicate its urban format outside its home base of New York City, entered bankruptcy with a stalking horse bid, from New Jersey-based Village Super Market.
Village originally offered to pay $70 million for up to five Fairway locations and a distribution center, but wound up acquiring four stores and the distribution center for about $76 million after another bidder, Bogopa Enterprises, entered the proceedings. Bogopa wound up acquiring two Fairway locations.
PJ Solomon, which worked with Fairway Market and Lucky’s Market, is serving as KB’s investment banker as it navigates the bankruptcy process.
Correction: A previous version of this article incorrectly identified the year when Balducci’s was founded. The grocer was established in 1916.
