Published on: September 18, 2015
The Seattle Times
reports that bankrupt Haggen has sent a memo to employees saying that it is working with Albertsons - the company that it acquired 146 stores from in what ended up being a disastrous move, as well as the company that it currently is suing for $1 billion, accusing it of sabotaging its attempts to make the stores competitive - to get it to rehire some of the employees that moved to Haggen in the transition. It requires the permission of the Federal Trade Commission (FTC).
According to the story, "Haggen said the companies are 'cooperating' in a request to waive the one-year ban preventing Albertsons from hiring workers from the 146 stores it sold to Haggen. That ban, like the sale of the stores, was required by federal antitrust regulators as a condition for Albertsons’ $9.4 billion takeover of Safeway.
"The order was meant to protect Haggen from poaching by a bigger rival. But now, with Haggen planning to shrink under Chapter 11 bankruptcy protection, the ban stands in the way of job security for thousands of grocery store employees ... Haggen told staffers that getting a waiver from the FTC has been a 'priority,' to 'ensure our employees can take advantage of every opportunity available to them'."
In the memo, the story says, Haggen assured employees "that it’s in active talks with many different potential buyers for 'a significant number' of locations. 'We hope to share more details as they become available, perhaps as soon as next week'."
it is just the latest twist in the Haggen saga, which has been a debacle ever since it acquired the Albertsons and Safeway stores. From the beginning the stores were perceived as being high-priced, with the emphasis seemingly placed on high margins rather than competitive prices. As a result, Haggen has been experiencing a serious traffic, sales and profits problems in the new stores, which created cash flow issues, which resulted in slowed shipments and increased out-of-stocks, which in turn led to even lower sales ... and, finally, the decision to file for bankruptcy protections and sell off as many stores as possible - perhaps even the entire chain.
Haggen reportedly owes its creditors more than $270 million.
Now, the Oregonian
reports that Haggen has asked the bankruptcy court overseeing its business "for approval to pay an investment banking firm more than $1 million to explore selling the company and its assets, including stores." That firm is Sagent Advisors, described in the story this way:
"The firm oversaw the 2011 purchase of Haggen's majority stake to private equity firm Comvest, as well as the grocer's purchase of 146 stores from Albertsons earlier this year.
"It entered into a new agreement with the firm in November 2014 for financial advice in 'connection with a potential sale or acquisition of Haggen, Inc.,' documents show.
"Haggen has paid Sagent more than $4.4 million since November, the records show, and plans to pay it more than $1 million more to explore selling the company now ... Haggen plans to pay Sagent a transaction fee of at least $1.25 million (or $30,000 per store, or a small percentage of the sale price, whichever is greater), plus $50,000 a month for its services, the document says.
"The grocer's filing deems the terms 'reasonable and appropriate,' and goes on to justify the contract: 'Sagent is needed ... to assist with negotiations, to provide expert advice and testimony regarding financial matters related to transactions ... and to enable the debtors (Haggen) to discharge their duties as debtors and debtors-in-possession'."