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AWI: White Rose woes, increasing competition led to bankruptcy

An inability to realize synergies related to its 2006 acquisition of White Rose, along with “fierce” competition besetting its cooperative and voluntary wholesaling units, triggered significant financial challenges for Associated Wholesalers, the distributor said in its Chapter 11 bankruptcy filing Tuesday.

Jon Springer, Executive Editor

September 9, 2014

2 Min Read
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An inability to realize synergies related to its 2006 acquisition of White Rose, along with “fierce” competition besetting its cooperative and voluntary wholesaling units, triggered significant financial challenges for Associated Wholesalers Inc., the distributor said in its Chapter 11 bankruptcy filing Tuesday.

AWI said it made the filing in order to facilitate an orderly sale and obtain debtor-in-possession financing that would allow it to continue operating while a court-led auction proceeds. The company in a filing said it had defaulted on bank loans this year and required DIP financing to avoid a “free-fall” bankruptcy and liquidation.

C&S Wholesale Grocers has made an offer to buy AWI and its offer was determined to be the “stalking horse” bid for the company. C&S is also participating in the DIP financing for AWI.

C&S’s offer is for the lesser of AWI’s bank debt — at least $132 million, according to AWI — or $152 million, along with adjustments for various additional debts. AWI said it has around $72 million in trade debts. Its largest unsecured creditors are Western Family Foods (owed $4.5 million), Tyson ($2.9 million), Kellogg’s ($2.7 million) and General Mills ($2.4 million).

C&S was one of three companies that expressed interest in purchasing AWI during an evaluation by Lazard Middle Market earlier this year. A previous attempt to sell only White Rose did not generate sufficient interest, AWI said.

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AWI said its revenues have held steady near $2.2 billion in the fiscal years ended Aug. 31 of 2011, 2012 and 2013, split evenly between its cooperative and White Rose divisions. But profits at both divisions have fallen in each year over the same period, with coop profits sinking to $19 million last year and White Rose showing a $2.6 million loss.

AWI is owned by 500 retailer-owners and distributes to more than 800 supermarkets, specialty stores and convenience stores in seven states. It operates distribution centers in Robesonia, Pa., and in York, Pa. White Rose distributes to 495 customers in the greater New York area through warehouses in Carteret, N.J., including retailers Fairway, Pioneer and Met Food.

 

About the Author

Jon Springer

Executive Editor

Jon Springer is executive editor of Winsight Grocery Business with responsibility for leading its digital news team. Jon has more than 20 years of experience covering consumer business and retail in New York, including more than 14 years at the Retail/Financial desk at Supermarket News. His previous experience includes covering consumer markets for KPMG’s Insiders; the U.S. beverage industry for Beverage Spectrum; and he was a Senior Editor covering commercial real estate and retail for the International Council of Shopping Centers. Jon began his career as a sports reporter and features editor for the Cecil Whig, a daily newspaper in Elkton, Md. Jon is also the author of two books on baseball. He has a Bachelor of Arts degree in English-Journalism from the University of Delaware. He lives in Brooklyn, N.Y. with his family.

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