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Penn Traffic asks court to approve bid procedures for pharmacy assets
By Lisa Kerner
Charlotte, N.C., Jan. 4 - Penn Traffic Co. requested court approval of the bid procedures for the proposed sale of its pharmacy assets and inventory, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.
Specifically, the company is asking the court to approve a stalking horse agency agreement with a joint venture comprised of Hilco Merchant Resources, LLC and Hilco Real Estate Holdings, LLC.
The company said it is also soliciting competing bids for the assets.
According to the motion, the stalking horse agent has agreed to pay Penn Traffic an initial guaranteed payment of $15.8 million, plus an additional $2.8 million within two business days of the completion of store closing sales, as well as an additional $1.15 million, for a total guaranteed purchase price of $19.75 million.
To the extent that the comprehensive sale proceeds exceed the sum of the guaranteed amount, the total amount of expenses and a $2.0 million agent's fee, then all remaining comprehensive sale proceeds will be shared, with 60% going to the merchant and 40% to the stalking horse agent.
If the joint venture is not the high bidder, Penn Traffic will pay it a $300,000 break-up free and reimburse up to $50,000 of its expenses, the filing said.
A hearing is proposed for Jan. 8.
Competing bids are due by noon ET on Jan. 20. The auction will be held on Jan. 22 at 9 a.m. ET, if necessary.
Each competing bid must be equal to the sum of the guaranteed amount, the expense reimbursement, the break-up fee and a $150,000 minimum initial bid amount.
All subsequent bids must be made in increments of $100,000.
All bids must include a 10% deposit.
Penn Traffic, a Syracuse, N.Y.-based company involved in retail and wholesale food distribution, filed for bankruptcy on Nov. 18. The Chapter 11 case number is 09-14078.
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