Chain Agrees to Acquire 3 Stores From Irvine Ranch
The company that owns Boys Markets has reached an agreement in principle with Irvine Ranch Farmers Market to pay $5 million in cash for three stores of the bankrupt grocery chain, with an option to buy two others.
If the deal is completed, Century City-based American Breco Co. hopes to transform the ailing company into a healthy, upscale chain with up to 15 Southland stores over the next five years, said Peter Sodini, Boys’ president and chief executive, who has acted as a consultant in negotiations.
Under the agreement, which was reached late last week, American Breco would pay $5 million in cash for the chain’s three most profitable stores, plus about $1 million for inventory. The stores are in Costa Mesa, Tustin and the Beverly Center in Los Angeles, which is the chain’s flagship.
Court Hearing Set
It also would have the option of paying another $100,000 each for the stores in Mission Viejo and Orange. In addition, American Breco has been talking with Irvine Co.--owner of the flashy, 63,000-square-foot Irvine Ranch store in the Newport Center/Fashion Island shopping mall--about operating that store for Irvine Co.
A hearing has been set for Sept. 16 for Irvine Ranch to get approval for the sale from the U.S. Bankruptcy Court--a necessary step before the deal becomes final. If approved, Boys Markets hopes to take over the Irvine Ranch stores by Oct. 1.
But MarcWinthrop, bankruptcy specialist with Lobel & Winthrop, which represents Irvine Ranch stressed late Tuesday that the sale to American Breco is far from certain.
Winthrop said a principal of Chalet Gourmet, an upscale grocery store in Los Angeles, surfaced Tuesday and expressed “much firmer interest” in investing money in the company. “We’re exploring that possibility very, very seriously.”
If that investor stepped up with funds, he most likely would want controlling interest in Irvine Ranch, and the deal with American Breco would fall apart, Winthrop said. Since Irvine Ranch filed for protection from creditors in July, Winthrop and the chain’s majority owner and founder, Jon Hubbard, have repeatedly said they would prefer investor backing to selling the chain’s stores.
The owner of Chalet Gourmet could not be reached Tuesday for comment, but he is expected to meet this week with Irvine Ranch’s attorneys.
Hubbard said his company “is still looking at our options. . . . We want to keep as many of our people together as we can,” he added.
American Breco is a holding company for the wealthy Brener family of Mexico, which is headed by Alfredo and Gabriel Brener. The Breners tried to enter Southern California in 1985, when they sought a joint venture with Fiesta Marts, Houston, to open a group of minority-oriented combination stores. They bought Boys Markets earlier this year. Among the holdings of the Brener family are a real estate development company in Denver, a Palm Springs shopping center and a working ranch in New Mexico.
Could Sell Others
The deal with American Breco would leave key management in place, with Hubbard continuing as president, Sodini said. Employees at the store level also would not be affected.
If the deal with American Breco is completed, Sodini said, “we would have to figure out what to do” with the stores in Irvine, Woodland Hills, Yorba Linda and Newport Beach. One option, according to Winthrop and Sodini, is for the stores to be sold to a purchaser who has the right to use the Irvine Ranch name, with the understanding that quality standards must be maintained.
The San Diego store in Horton Plaza is not owned by Irvine Ranch, but is managed by the chain in exchange for a fee. Winthrop said Irvine Ranch is evaluating the store’s operation to determine whether to continue the management contract.
The Northridge store was closed soon after Irvine Ranch filed for bankruptcy protection.