PAPERS REVEAL BRADLEES NIXED CALDOR CONCEPT
Byline: Jeff Siegel and Rich Wilner
NEW YORK — On June 21, with factors choking off shipments to Bradlees Inc. and the possibility increasing that the chain would be forced to file Chapter 11 to insure fully stocked shelves for the back-to-school season, directors of Bradlees rejected a suggestion by one board member that Bradlees merge with rival Caldor Corp. Two days later Bradlees was forced to seek court-protected reorganization.
More than two months earlier, in a three-hour meeting between Mark A. Cohen, chairman and chief executive officer of Bradlees, and Caldor ceo Don R. Clarke on April 4, Clarke “suggested that because of the competitive environment in the Northeast, and other factors, he thought it would be advisable to consider a merger of the two companies,” according to Cohen.
All of that was disclosed Wednesday after papers in an unrelated dispute between the two discounters were unsealed in Manhattan Bankruptcy Court.
Bradlees’ lawyer, Stuart Hirshfield of Dewey Ballantine, said Wednesday that the Caldor merger overtures are now a dead issue, as are two other purchase proposals by other retailers that were received by Bradlees.
Still, Cohen admitted in the court papers that he would be forced to seek a merger or asset sale if Bradlees’ restructuring were unsuccessful.
Court papers show that on Sept. 12, Price Costco, Issaquah, Wash., offered to purchase 21 Bradlees stores for $200 million. Additionally, S.R. Weiner and Associates, Chestnut Hill, Mass., which operates the Lechmere chain, offered on Oct. 18 to purchase the 61 Bradlees stores in New York, New Jersey, Virginia and Pennsylvania for an undisclosed sum.
Industry watchers have suggested for months that a merger of at least two of the several ailing Northeast regional discounters — including Caldor, Bradlees, Ames Department Stores, Hills Department Stores and Jamesway — was needed to ward off the competition from Wal-Mart Stores and Kmart Corp.
In the unsealed papers, Cohen said Bradlees’ directors “considered Caldor’s proposal,” but determined that it was “not appropriate to pursue” at the time of the bid.
The Caldor-Bradlees merger idea also was brought up twice in October, once by an unnamed investment bank and once by an unnamed commercial bank, according to the court papers.
An affidavit filed by Cohen and several other Bradlees executives was filed in support of a motion by the U.S. Trustee, who is objecting to the retention by Caldor’s unsecured creditors’ committee of Otterbourg, Steindler, Houston & Rosen as attorneys and Ernst & Young as accountants and financial advisers.
Both Otterbourg and Ernst & Young represent rival Bradlees creditors and the Trustee fears that there could be a conflict of interest by the two professional groups.
— Fairchild News Service