Associated Wholesalers Inc. said Tuesday that it had entered into an agreement with C&S Wholesale Grocers whereby C&S would be the "stalking horse" bidder in an auction of AWI and its subsidiaries in U.S. Bankruptcy Court.
The offer is subject to potentially higher or better offers. AWI and its subsidiaries on Tuesday filed Chapter 11 petitions in Delaware, which the companies said would allow for an orderly sale.
AWI, a cooperative wholesaler based in Robsonia, Pa., earlier this year said it would seek to sell its White Rose subsidiary, a voluntary wholesaler based in Carteret, N.J. but subsequently said it was negotiations to sell the entire company. AWI and White Rose are expected to continue operating in the normal course during the sale process.
“We believe that the asset purchase agreement with C&S is in the best interest of AWI and its stakeholders,” said Joyce Fasula and Mike Rothwell, chairman and vice-chairman of the AWI board, respectively. “After conducting a thorough process, which included the exploration of a range of alternatives and reaching out to multiple interested parties, we determined the best course of action for AWI was to enter this agreement with C&S and to undertake the court-supervised sale process.”
“The addition of AWI and White Rose would expand C&S’s footprint and enhance our significant capabilities in servicing independent grocers,” said Rick Cohen, chairman and CEO of C&S, based in Keene, N.H. “AWI and White Rose have a terrific customer base, and their distribution capabilities are a natural complement to our existing portfolio. We believe we are strongly positioned to provide all of their customers with the goods and services they need to successfully run and even grow their businesses.”
In conjunction with the proposed transaction, AWI has received a commitment for “debtor in possession” financing to support its continued operations during the pendency of the sale process. C&S has also made a commitment to participate in the financing package.
AWI has filed a number of customary motions seeking court authorization to continue to support its business operations during the transaction process, including the continued payment of employee wages, salaries and health benefits without interruption. AWI has also asked for authority to continue existing customer programs and intends to pay suppliers in full under normal terms for goods and services provided after the filing date.