PHAR-MOR AUCTION Closings loom for stores
Giant Eagle will try to recruit as many Phar-Mor employees as possible, a company attorneysaid.
By MARALINE KUBIK
and DON SHILLING
VINDICATOR STAFF WRITERS
YOUNGSTOWN -- A bidding group that includes Giant Eagle and CVS won an auction for Phar-Mor stores and its distribution center but is revealing little about its plans.
"It appears like most of the stores are going to close," said Daniel Shapira, a Giant Eagle lawyer, after a 14-hour auction ended just before midnight.
When asked if any of Phar-Mor's stores will remain open, Shapira declined to be more specific.
"Giant Eagle will try to recruit as many Phar-Mor employees as possible, especially in areas where there are Phar-Mor and Giant Eagle stores," he said.
In the private auction, bidders dickered back and forth until Phar-Mor declared that a joint venture involving Pittsburgh-based Giant Eagle, Rhode Island-based CVS and two liquidating companies was the best bid.
Those who disagree with Phar-Mor's pick can file objections today in U.S. Bankruptcy Court in Youngstown. Judge William Bodoh will be asked to approve the sale to the Giant Eagle group Thursday.
Cory Lipoff, a principal at Chicago-based Hilco Merchant Resources, one of the liquidating companies, said the winning bid was "north of $141 million."
As of early today, nothing was made public about the intentions of the winning group.
Earlier, the group included just Hilco and the Boston-based Ozer Group, who said they wanted the Phar-Mor chain to try to sell groups of stores to retailers. If they weren't successful, the stores would be liquidated.
There were at least nine bidders Tuesday, but the only other group that made its bid public was Snyder's Drug Stores of Minnetonka, Minn.
Shapira said the Giant Eagle group had the only offer on the table when Snyder's withdrew its offer.
Gordon Barker, Snyder's chief executive, announced "Snyder's is out," as he and a handful of his associates left Phar-Mor's downtown Youngstown headquarters around 11:30 p.m. Tuesday.
When asked for more specific information, Barker's only comment was, "It's an auction. We're leaving it to them."
Snyder's original bid was worth $145 million. About $70 million of that was for the 30 Phar-Mor stores it intended to operate and the Tamco distribution center in Austintown. The rest would come from liquidating the other stores.
Phar-Mor officials said at a court hearing last month that they didn't like this bid as much as the liquidators' bid because the payment wasn't all cash. Part of the payment was in corporate notes.
Bob Bernat, secretary-treasurer of Teamsters Local 377, said he will try to talk to Giant Eagle officials about their plans for Tamco, which has about 250 union workers.
Bernat said he asked Shapira about the warehouse last week and was told that Giant Eagle wasn't sure what its plans were.
"They may sell it. They may sell it to Snyder's. Who knows?" Bernat said.
Snyder's has the support of area union, political and business leaders because it was the only company to state that it wanted to continue operating Phar-Mor stores and Tamco.
More than 1,000 area jobs are in jeopardy, including about 180 at Phar-Mor headquarters downtown.
Snyder's said it would need some of the headquarters workers and would expand employment at Tamco because it would use the warehouse to send products to about 300 stores. Snyder's wanted to operate at least 30 of Phar-Mor's 73 stores, including at least six of the eight stores in this area.
When Phar-Mor filed for bankruptcy protection in September, it said it intended to continue operating. Continuing heavy losses, however, forced it to decide to sell the company's assets.