Retailers

Food Bazaar Owner Makes a Move for Fairway

Outbids ShopRite by $5 million and one store
Photograph by WGB staff

Bogopa Service Corp., operator of New York’s multiethnic Food Bazaar superstores, has swooped in with a qualified overbid for a group of Fairway Market stores being auctioned as a part of Fairway’s Chapter 11 bankruptcy proceedings.

The $75 million offer for six Fairway store leases and their inventory, as well as its production and distribution center (PDC), has been designated as the “highest and best” offer for the assets of the storied New York brand, succeeding the initial “stalking horse” bid from ShopRite operator Village Super Markets.

The Food Bazaar offer is for all five of the Manhattan Fairway stores and the PDC that Village had bid for, plus one more—Fairway’s store in Pelham Manor, N.Y. The bid was revealed this week ahead of an auction of the ShopRite package on March 10. That auction has been rescheduled for March 16 with a new high bidder. Fairway is separately seeking offers for all 14 of Fairway’s stores, with a separate auction scheduled for March 26.

Food Bazaar’s offer is $5 million more than Village’s $70 million bid but has other key differences as well. ShopRite’s offer included a right to remove the PDC and Fairway’s stores in Manhattan’s Harlem and Chelsea neighborhoods in advance of the auction, while Bogopa’s offer does not. Instead, court papers indicate that Bogopa would have limited designation rights to assign leases of Fairway’s Kips Bay and Chelsea locations to qualified third parties before April 1.

It was not immediately clear whether Village, based in Springfield, N.J., would subsequently increase its offer, but a bidding war would be welcome for Fairway creditors.

Further details of the offer indicate that Bogopa is offering nothing for the lease of the Pelham store but $1.8 million for its inventory, prepaid expenses and cash. The jewel of the package is $29 million for Fairway’s flagship store on Broadway on Manhattan’s Upper West Side.

Should Bogopa be outbid in the auction, is it not obligated to proceed with the purchase of the Pelham location, court papers indicate. The offer includes employment offers to at least 85% of Fairway’s current union-represented workers at the acquired stores and 50% of its PDC workers. 

Bogopa, based in Queens, N.Y. and founded by Korean-South Americans, is known for high-volume, fresh-focused stores aimed at New York’s multiethnic neighborhoods. It currently operates 26 Food Bazaar stores in New York, New Jersey and Connecticut, including a new unit that opened in the Bronx in February. 

Fairway in a release said it has also received “competitive bids for various other stores” that are being evaluated.

“We would like to extend gratitude to our employees, vendors, distributors and customers for their continued support, dedication and loyalty during this process. Fairway’s store performance has generated significant interest in our stores.  We look forward to a robust auction,” said Abel Porter, CEO of Fairway Market.

Fairway Group Holdings and its affiliated companies filed for Chapter 11 protection in January seeking to liquidate, having been unable to find a buyer for the company as a whole. Fairway had long battled high operating costs and debt service while sales declined amid competitive incursions.

Fairway Market’s legal counsel is Weil, Gotshal & Manges LLP. Its mergers and acquisitions investment banker is PJ Solomon and its financial adviser is Mackinac Partners. An Ad Hoc Group of senior lenders is represented by King & Spalding LLP.

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