Offer for Pic ‘N’ Save Will Not Be in Cash, Suitor Says

The investment group pursuing Pic ‘N’ Save on Monday said it does not expect to come up with an all-cash offer for the close-out store chain and instead will push for a stock buyback or an extraordinary dividend.

Meanwhile, a Sunday midnight deadline for buyout bids passed without comment from Pic ‘N’ Save executives.

The deadline also marked the expiration of a truce in a proxy war begin waged by Pic ‘N’ Save executives and Girard Partners, headed by La Jolla financier David H. Batchelder, which owns 6.6% of the company’s common stock.

In a filing with the Securities and Exchange Commission on Monday, Girard said it probably could not put together an all-cash offer that “would be attractive to stockholders” after talks with potential lenders and a review of internal information provided by Pic ‘N’ Save.

But Girard said there was a better chance to finance a recapitalization of the company, which could take the form of a substantial stock buyback or a special dividend. Both would require the company to take on more debt. Girard would pursue such efforts if its slate of nominees are elected to the Pic ‘N’ Save board and no other suitable takeover proposals are received by the company’s annual meeting Aug. 29, according to the SEC filing.

Girard said it was also contemplating replacing an all-cash offer with a combination of cash, securities and debt.

Girard’s inability to finance an all-cash offer is symbolic of a more cautious approach toward hostile takeovers and a drop in junk bond financing, said William D. Tichy, an analyst with Dean Witter Reynolds Inc. in San Francisco.

Pic ‘N’ Save stock fell 75 cents to $10.625 in trading Monday.