MONTVALE, N.J. — The previously announced property deal that would net A&P  $130 million includes two Food Emporium leases to be sold to a private investment firm — and may be the only results of the retailer’s latest attempt to sell off the chain.
A&P here referred to a deal to sell leasehold interests in “a few” stores last month but did not identify the stores affected or the buyers. The company, however, revealed in court papers it had an agreement in place to sell leases to Food Emporium stores at 2008 Broadway and 475 6th Ave. to Madison Capital, and that it intended to shutter those stores before the deal closes in mid-May.
The papers were filed by A&P as it defended itself in a lawsuit brought by United Food and Commercial Workers Local 342, which represents workers at Food Emporium. The union argued that A&P violated certain terms of its contract with the union as part of its effort to sell The Food Emporium. That suit was still pending as of last week.
An affidavit by Derek Kinney, A&P’s vice president of human resources and labor relations, revealed that A&P fielded another offer from a private buyer for six of its Food Emporium stores. The union in the meantime had introduced a potential buyer for the Food Emporium stores that could not sell but A&P’s bankers determined that group “did not mount a serious attempt to purchase the stores.”
A&P said it offered a buyout worth around $2 million to employees who would be affected by the store closures but the union rejected the buyout, insisting that contractual terms agreed to with the retailer forbid such actions. A&P has argued the contract does not prevent it from closing stores.
A&P said the agreement to sell the stores would allow it to keep open its other 14 locations of The Food Emporium. Failure to close the deal would cost A&P millions, it added, “which would likely mean extensive layoffs and store closings.”
The details of the dispute came to light while A&P acknowledged that a new chairman, Gregory Mays, has replaced Ron Burkle. Burkle’s Yucaipa Cos. is A&P’s majority owner. Mays is a former Pathmark and A&P board member and a longtime Burkle associate.
Mays in a meeting with union leaders late last month said the company was showing some financial improvement including positive cash flow, according to sources who attended the meeting. Financial results for the fiscal year that ended in February were not yet available.
“I’m not easily impressed but I was very impressed with Greg Mays; he comes across as an extremely knowledgeable and compassionate individual,” John Niccolai, president of United Food and Commercial Workers Local 464A, Little Falls, N.J., told SN. Niccolai was among leaders of 12 local unions who met with Mays for what Niccolai described as a periodic business update. “He has got a very good handle on overseeing and operating a supermarket chain.”
The company also discussed efforts to improve operations through new programs around pricing, ordering and shrink, sources said. That effort is being led by Mike Mills, who was one of two executives appointed in November to take over responsibilities for merchandising and marketing from Tom O’Boyle after O’Boyle left to run Marsh Supermarkets.
Read more: A&P to Raise $130M in Property Deals 
Mays’ experience includes stints with the board of directors of A&P and Pathmark, and he served as chief executive officer of Wild Oats Markets. Mays more recently was CEO of Source Interlink, a publishing company that was also owned by Yucaipa.
Sources also said Carter Knox, A&P’s chief human resources officer, had announced plans to retire. An A&P spokesman had no comment when asked to confirm that.
Niccolai said discussion at the meeting centered on union desires to win back concessions they had made during A&P’s bankruptcy proceedings if and when the company becomes profitable again.
In a message to union members on the Local 464 website, Niccolai said, “The meeting should be viewed as positive in nature, but more than ever we need to be prepared for all options including, at some point, the sale of the company in whole or in part.”
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