UTICA, N.Y. -- Victory Holdings Corp. here last week completed its acquisition of Almacs Inc., East Providence, R.I., and plans to launch an aggressive upgrading program at the 26-store chain.
Victory, parent company of Victory Markets, which operates 72 Great American Food Stores in upstate New York, will continue to operate the 19 stores in Rhode Island and seven in Massachusetts under the Almacs name.
Almacs had been operating under Chapter 11 bankruptcy protection since Aug. 6, 1993. The U.S. Bankruptcy Court for the District of Rhode Island in Providence approved Almacs' reorganization plan earlier this month. That
paved the way for last week's announcement finalizing the deal.
Under the reorganization plan, the Almacs stores were acquired last week by New Almacs Inc., a wholly owned subsidiary of Victory Holdings that was formed for the purpose of the acquisition. Victory paid $30 million to Leonard Green & Partners, a Los Angeles-based investment company, to complete the transaction.
Aaron Malinsky, president and chief executive officer of Victory, has been installed as the chairman and CEO of New Almacs. He succeeds Thomas F. Ireland, who had been brought in as Almacs' president and CEO in October 1993 from Alvarez & Marsal, a New York-based consultancy, to nurse the company through its financial difficulties.
Ireland has returned to his consulting company.
Victory will lay off almost 100 of Almacs' 105-member corporate staff and relocate those functions to its Utica, N.Y., corporate headquarters, said Thomas J. Murphy, a Victory spokesman. No further corporate-level layoffs are anticipated, he added.
Malinsky said last week, "[Now that] we have a strengthened Almacs with an improved financial position, we intend to use an aggressive, competitive marketing philosophy to restore the pre-eminent role of Almacs as the friendly and convenient neighborhood supermarket."
The changes Victory contemplates for Almacs include the following:
· A commitment to improve product selection by adding more than 1,000 new items per store to enable the chain to target local market preferences at each location.
· A renewed emphasis on perishables departments, which will provide a strong alternative to Stop & Shop, which is a market leader, and other operators, Murphy said.
· An expansion program that includes opening between one and three new stores within the next year to 18 months.
A former Almacs location in Bristol, R.I., has received "some very serious review and evaluation," and another site in Portsmouth, R.I., is also being considered for a possible Almacs location, Murphy told SN.
· Relocating all buying and merchandising for both Victory and Almacs into a single location in Warwick, R.I., a suburb south of Providence.
The site also will house a group management team composed of Victory and Almacs personnel to supervise operations of the Almacs stores. The Warwick location, adjacent to an Almacs store, will replace a buying and merchandising office in Boston that Victory opened in November 1993 to help the Victory chain's buying effort.
· Changing the full-time status of 170 employees to part-time, or offering them contract buyouts over the next six months under a collective bargaining agreement approved by the bankruptcy court.
The court also approved a continuation of the employees' current 9% wage cut through March 1996, after which a cumulative 15% wage increase will begin to be phased in over the remaining three years of the contract, Murphy said.
Under other terms of the court-approved agreement that ends Almacs' bankruptcy, lenders and bondholders will receive an $11 million note for their $104 million in debt. They also have agreed to invest $4 million in the new company.
In addition, both Victory Holdings, the new owner, and Leonard Green, the former owner, agreed to inject $9 million into Almacs to fund payments under the reorganization plan and to fund ongoing Almacs operations.