LOS ANGELES -- Ron Burkle's Yucaipa Cos. hopes to salvage the Fresh & Easy Neighborhood Market chain now that it’s won court approval to take over the about 150 stores.
Judge Kevin Carey on Friday signed off on the deal, which is being financed by the British retailer with a $120 million loan, part of an agreement struck before Tesco put Fresh & Easy under Chapter 11 bankruptcy protection, according to a Wall Street Journal report.
Yucaipa is projecting the relaunched Fresh & Easy will "likely achieve positive EBITDA [earnings before interest, taxes, depreciation and amortization] of tens of millions of dollars," an attorney for Yucaipa told Judge Carey at a hearing in the U.S. Bankruptcy Court in Wilmington, Del.
Yucaipa tapped James Keyes, former chief executive of 7-Eleven Inc. and Blockbuster, to come up with a winning strategy for Fresh & Easy and negotiate the deal with Tesco. His solution is to deliver "healthy, high-quality product at an affordable price."
Fresh & Easy creditors backed the deal, which allows Yucaipa to walk away with the working capital, because it means a much lighter load of debt to be resolved in bankruptcy, the newspaper reported.
Tesco launched the Fresh & Easy concept in 2008 and decided to cut its losses by exiting the United States with a bankruptcy that would ease the sale to Yucaipa and wring value out of remaining assets.
Yucaipa Cos. LLC is a Los Angeles-based holding company, focusing on private-equity investments. The firm was founded in 1986 by its billionaire chairman, Ronald Burkle.
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