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Ex-Boscov's execs retake store chain
(Lancaster New Era (PA) Via Acquire Media NewsEdge)
Nov. 5--Boscov's has changed horses in the middle of the bankruptcy stream.
The company said Tuesday it has agreed to be acquired by a group led by its former executives and owners, Al Boscov and Edwin Lakin.
A price was not disclosed.
As part of that move, Reading-based Boscov's canceled its previous agreement to be acquired by Versa Capital for about $288 million.
Versa's bid was to serve as a starting point for an auction of the chain of 39 department stores, which includes a store at Park City Center.
By making the initial offer, Philadelphia-based Versa was to fill the role of the so-called "stalking horse," setting the pace for the bidding.
With the new deal, there no longer will be an auction, a Boscov's spokesman said.
Boscov's said it hopes to get the new deal approved by Bankruptcy Court Judge Kevin Gross at a Nov. 13 hearing in Wilmington, Del.
The company added that it believes it can complete the transaction before the end of November.
Boscov's was established by Solomon Boscov in 1911, who began as a peddler who went door to door. He opened his first store two years later.
Solomon Boscov's son, Al Boscov, and son-in-law, Edwin Lakin, joined the business in 1954. In 1962, they launched an expansion that, over the following decades, built Boscov's into a regional chain. They retired in 2006.
They also transferred their ownership stakes to other family members.
With the deal disclosed Tuesday, Boscov, 79, and Lakin, 85, would become owners once again. Whether they'd have a role in management, though, was not immediately clear.
Lakin's son, Ken Lakin, the company's chief executive officer, said the new deal "maximizes the value of our business and the return to our creditors.
"It also provides certainty about the future direction of our company. As we move toward the completion of our restructuring process, Boscov's will be well-capitalized and have the resources to build a stronger and more competitive business," he said in a prepared statement.
The younger Lakin said the new deal has the support of the company's creditors.
Boscov's filed for bankruptcy Aug. 4, hurt by a downturn in consumer spending caused by the weakening economy and by a tight credit market, which limited its ability to borrow funds needed to pay suppliers.
The mid-Atlantic chain immediately began closing 10 unprofitable locations.
In September, Boscov's said it needed to put itself up for sale promptly, to avoid liquidation. The company set up an auction process and struck the deal with Versa.
Shortly thereafter, the competing Boscov/Lakin bid surfaced. The auction was postponed several times as management weighed the two offers.
While other potential buyers expressed interest in Boscov's, only Versa and the Boscov/Lakin group made formal bids, a Boscov's spokesman said.
The deal with Versa called for the firm to receive a $4 million break-up fee if it was not the successful bidder, under certain conditions. Boscov's contends those conditions were not met, the spokesman said.
To see more of the Lancaster New Era, or to subscribe to the newspaper, go to http://www.lancasteronline.com/newera.
Copyright (c) 2008, Lancaster New Era, Pa.
Distributed by McClatchy-Tribune Information Services.
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