Grocery Chain Haggen Receiving $215M Cash Infusion

The Safeway acquisitions did not include the Aberdeen location on Heron Street.

Haggen does not have enough money to operate its stores without the interim financing, Thursday’s ruling suggests.

“After careful consideration of all alternatives, the company concluded that a reorganization through the Chapter 11 process is the best way for Haggen to preserve value for all stakeholders”, said John Clougher, Chief Executive Officer of Haggen. “The Aberdeen store is still up and operational”.

Chapter 11 is a chapter of Title 11 of the United States Bankruptcy Code.

“We can not comment further at this time”. The company said earlier in a press release that it secured $215 million from its creditors to continue operating and keep products on the shelves while it sells stores. The company has hired Sagent Advisors to explore the market for the sale of some of its stores. The reorganization “will allow us to continue to serve our customers and communities while providing Haggen with a process to realign our operations for the future”.

Grocery giants Safeway and Albertsons announced plans to merge in 2014. The FTC ordered Albertsons to shed stores due to anti-competition concerns and Haggen agreed to buy the lion’s share of the locations. He said the FTC was satisified with the deal. It has only 18 stores in its home region, based in Washington.

Problems started surfacing nearly immediately.

Albertsons is also accused of providing misleading price information, resulting in the high costs many consumers have complained about since Haggen’s expansion in April.

In mid-August, Haagen said it would close or sell 27 stores in Arizona, California, Nevada, Oregon and Washington within the next two months. Last week, the company filed a $1 billion lawsuit against Albertsons.

“The allegations contained in the Haggen complaint are completely without merit and we will vigorously defend ourselves in court”, said Albertsons in a statement.

In its filing, Haggen has alleged that Albertsons singled it out for speeding its approval of merger with Safeway. Also, Albertsons didn’t carry on business-as-usual up until handing over the keys to Haggen, as required by the FTC and the purchase agreement, Haggen said. Haggen says it has been forced to “close about a fifth of the stores it had acquired”, alleging that this wide scale failure was orchestrated by Albertsons.

“We are extremely grateful to our employees who have worked so tirelessly on behalf of Haggen, especially over the last several months, and thank them for their dedication, loyalty and commitment”, according to the statement. The Simi Valley Haggen at 5135 E. Los Angeles Ave. remains open for now.

Among Haggen’s top creditors are distributor Unified Grocers, to which it owes $14.9 million; food supplier Topco Associates ($5.7 million); and real estate investment firm Merlone Geier ($5.7 million), according to court filings.