Triton Group of La Jolla is joining two San Diego investors to acquire substantially all the assets of the bankrupt Liquor Barn retail chain for $40 million. The prospective owners also said Wednesday that they plan a significant expansion of the chain, believed to be the largest liquor retail operation in the nation.
The two businessmen, Harvey Rosen of Rancho Santa Fe and Lewis Silverberg of San Diego, announced last week that they planned to buy the 68-store, San Leandro-based chain, and that they were looking for an equity partner.
Triton Group, a publicly owned, diversified holding company, will provide up to $8 million cash for the purchase, taking a 51% ownership stake in the chain, Triton Vice President Mitchell Woodbury said. Silverberg, Rosen and other Liquor Barn managers will invest $2 million or more in cash with the remainder of the purchase cost to be raised from bank and bond financing, he said.
Liquor Barn has been under protection of a U.S. bankruptcy court in Oakland since last November. Even after the proceeds from the sale of assets, Liquor Barn creditors may end up taking a "haircut in the $40-million range," Woodbury said.
Back to High Volume
Liquor Barn ran into problems after London-based Majestic Wine Warehouse acquired it from Safeway Stores in 1987 in a highly leveraged deal estimated at $110 million. Majestic closed many locations and unsuccessfully switched from a high-volume, discount operation to a "boutique approach" featuring a smaller, higher-priced selection.
Losses resulted last year in Majestic losing control of Liquor Barn to American and British banks who acquired 66% interest in the chain.
Sales are running at a rate of about $200 million a year, Woodbury said, down from the $332 million revenue peak in 1986 when the chain consisted of 104 stores, all in California.
Rosen said the new owners plan to bring back the high-volume approach and to expand the chain particularly in Southern California, where 33 stores are situated. "We could easily double the stores in Southern California alone," Rosen said, declining to give a timetable for the expansion.
Rosen, 52, will be Liquor Barn's chief executive, and Silverberg, 54, will be general counsel.