January 4, 2010

Union backing Tops' offer

BY ERIC HRIN
The Daily Review

The United Food and Commercial Workers Union is backing a bid by Tops markets to buy out Penn Traffic Co.'s grocery stores, according to the president of UFCW Local 1776.

"We're all united on this," Wendell Young said. He said a conference call was held last week that included UFCW officials from union locals 1, 23, and 1776 and the upper management of Tops. More than 90 percent of Penn Traffic's 5,000 employees are represented by the UFCW, according to the Local 1 Web site.

"The bottom line is the Tops proposal saves and protects most of the jobs involved, and we're behind that," Young said, when asked for comment Sunday.

"We are supportive of that effort."

Last month, the Buffalo (N.Y.) News, the dominant daily newspaper where Tops is headquartered, reported that Tops Markets offered to buy all of Penn Traffic Co.'s 79 grocery stores, including the three P&Cs and two BiLos in Bradford County.

Its $90 million bid reportedly put Tops in competition with Price Chopper, which bid $54 million for 22 Penn Traffic stores, including the P&C in the Towanda area.

In addition, a group of four companies specializing in liquidation has also entered a bid in the amount of $36.5 million for all of Penn Traffic's assets, it was reported.

Tops has a retail outlet in Sayre along with 70 other retail stores in New York and Pennsylvania. Price Chopper, with 118 stores in New York, Pennsylvania and New England, is headquartered in the Albany, N.Y. area.

The Syracuse-based Penn Traffic, which employs more than 5,500 people, is selling 79 supermarket locations as part of a Chapter 11 bankruptcy filing undertaken last year. The stores operate under the names Bi-Lo, P&C and Quality in New York, Pennsylvania, Vermont and New Hampshire.

Penn Traffic filed for bankruptcy last month for the third time in a decade. This time, the company is seeking to sell all its assets. The company lost $17.6 million last year, an improvement over its $42 million losses in 2007, according to The News.

Young wasn't supportive of the other bids to buy out Penn Traffic's stores.

"Other proposals would create a sell-off of assets, and that would lead to more or most of the stores closing, and a loss of employment," he said. "We need to be maintaining and creating jobs, not eliminating them."

Young also thought the Tops proposals meets the objectives of the creditors committee in the bankruptcy proceedings.

"We think it's the best package in terms of meeting many of the creditors committee's objectives and securing the most amount of jobs," he said.

The committee includes the UFCW.

According to the UFCW Local 1 Web site, the United States Bankruptcy Court for the District of Delaware appointed the UFCW to the creditors committee in the bankruptcy of Penn Traffic. Penn Traffic owes an estimated $9.56 million to current and former employees, the Web site notes.

Young added that, if the bankruptcy court doesn't accept any proposals, it could conduct an auction to sell off the assets.

"They (Tops) are glad to have our support, I guess," he added. "They're working to get the best proposals as possible in front of the court."

The Web site for UFCW had a copy of two Nov. 18 letters from Penn Traffic to Frank DeRiso, president of UFCW Local One, the local in New York. One letter concerned New York stores and the other concerned Pennsylvania stores.

In the letters, the company had noted that if it can't get the financing it needs or alternative sources of capital and liquidity, or can't sell stores and/or warehouses to someone who would maintain them as ongoing operations, it will be forced to close them. For the New York stores, it stated this would be "as soon as on or about Feb. 15, 2010," and, for the Pennsylvania stores, it stated this would be "as soon as on or about Jan. 16, 2010."