By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Hope that Snyder's Drug Stores could save some Phar-Mor stores has evaporated, but workers at Phar-Mor's warehouse are still looking to Snyder's to save their jobs.
A court order that approved the sale of Phar-Mor assets Thursday cleared the way for liquidation companies to begin going-out-of-business sales at all Phar-Mor stores, perhaps as early as today.
The order by U.S. Bankruptcy Court Judge William Bodoh also gave control of the Tamco distribution center in Austintown to Giant Eagle, which doesn't have plans to use it.
Bob Bernat, secretary-treasurer of Teamsters Local 377, said, however, that a Snyder's official told him Thursday the Minnesota company still wants the warehouse, which employs about 250 hourly workers.
Deal is possible
Also, Bernat said a Giant Eagle official told him the Pittsburgh-based grocer is willing to sell it. Bernat said he was trying to arrange talks between Snyder's and Giant Eagle.
Michael Gallo, a Phar-Mor lawyer, said it wouldn't surprise him if those two companies arrange a deal.
Without a sale agreement, Giant Eagle has committed to using Teamsters workers only until the inventory at Tamco is cleared out, Bernat said.
Snyder's and Giant Eagle officials could not be reached for comment.
Judge Bodoh said he had received numerous requests from public officials and others asking him to delay his ruling in the hope that Snyder's would renew earlier efforts to buy the warehouse and 30 of Phar-Mor's 73 stores.
Law won't allow it
He said bankruptcy law wouldn't allow him to do that. In an earlier order, he found that Phar-Mor was justified in selling its assets and it was up to Phar-Mor and its unsecured creditors to determine what was the best bid.
Officials from both told him they agreed with the $141 million offer from two liquidation companies, Giant Eagle and CVS.
Because of written complaints he received, Judge Bodoh said he spent "considerable time" reviewing the question of whether he should stop the sale because Giant Eagle, which is a competitor to Phar-Mor, is involved in the buying group that is closing stores. He said he decided that issue was beyond the scope of his ruling under bankruptcy law.
Sale of stores?
An official with Hilco Merchant Resources of Chicago, one of the liquidators, said Wednesday that it would try to sell 21 Phar-Mor stores as ongoing operations, but Tim Pohl, a Hilco lawyer, said Thursday that no groups of stores have been set aside.
It's expected to take about six to 10 weeks to complete the going-out-of-business sales.
Pohl said some stores will simply be closed but some will be marketed for sale.
Brett Miller, a lawyer for Phar-Mor's unsecured creditors, said he doesn't expect any of the stores to open as drugstores because all of the prescription files were sold and the inventory is being cleared. Some other retail stores could open, he said.
Giant Eagle is receiving control of four of the 73 leases but has said it doesn't intend to operate any stores. Other leases are being returned to landlords or will be sold later.
Giant Eagle said it will control prescription files at 27 Phar-Mor stores in the Pittsburgh and Youngstown areas. CVS, a Rhode Island-based drugstore chain, is taking prescription files in Eastern Pennsylvania, North Carolina and Virginia.
Giant Eagle said it is switching Phar-Mor files to its stores and hopes to serve Phar-Mor customers.
Miller said those files would be Phar-Mor's most valuable asset but he didn't know what Giant Eagle and CVS paid for them.
Giant Eagle said it hopes to recruit hundreds of Phar-Mor employees, including nearly all pharmacists and most pharmacy technicians.
Karen Dolph, 42, of Youngstown, a pharmacy technician at Phar-Mor's Boardman store, said she won't work for Giant Eagle because she was told the pay would be minimum wage, or $5.15 an hour. She said she was paid $7.50 an hour at Phar-Mor before she went on disability because of surgery.
She said a corporate executive told store officials Thursday that the store would close and prescription files were being sent to Giant Eagle.
"It was solemn. It was like a morgue. We really thought Snyder's would take us," she said.
Employees thought Phar-Mor's stores in Boardman and Austintown wouldn't close because they're among Phar-Mor's busier stores, she said.
"None of us ever thought for a second that we'd be closed," she said.
In court last month, Snyder's attacked the bid from the liquidation companies, saying its bid was similar in price and would retain some jobs.
Gallo, Phar-Mor's lawyer, said in court Thursday, however, that Snyder's indicated at Tuesday's auction that it was no longer interested and withdrew from the bidding.
Gordon Brothers, a liquidation company that was working with Snyder's, then made a $138 million bid to liquidate all Phar-Mor stores. That bid was clearly inferior to the bid from the Hilco-Giant Eagle group, he said.
Youngstown Mayor George McKelvey said he thinks Snyder's walked away because it wasn't being treated fairly by Phar-Mor and the creditor's committee.
An added dollar value was given to Snyder's bid because of its intention to retain jobs, but McKelvey said it wasn't enough.
"The whole deal stinks," he said.
Phar-Mor has thousands of employees at those 30 stores so the wages that flow into the communities where those stores are located is in the tens of millions of dollars, he said.
Bev Van Steenberg of Lake Milton, who is laid off from Tamco, said workers there were shocked when they learned Snyder's withdrew from the bidding. Snyder's had negotiated a labor contract with Teamsters and said it would add jobs because it wanted to use the warehouse to service 300 stores.
Phar-Mor laid off about 100 workers when it closed 65 stores last September and eliminated one of its two shifts.
Becky Raymer of Austintown, another laid-off Tamco worker, said workers expected hundreds of jobs and two more shifts to be added.
Instead, she will continue her search for a new job.
"There's nothing out there," she said.