Several potential buyers have emerged for bankrupt grocery chain Andronico's Markets, which says it needs to sell itself soon to pull out of a financial nose-dive.
Executives with Andronico's also say at least one of the buyers intends to invest millions of dollars to upgrade the shopworn stores in the chain, which has seven Bay Area markets. Andronico's filed for bankruptcy Aug. 22.
"We are in a cash squeeze," said Bill Andronico, CEO with the San Francisco-based grocery chain. "We need to complete a sale in October."
Andronico's specializes in gourmet and other specialty foods, along with wine, kitchen gadgets and tableware. The company has four stores in Berkeley, and single stores in San Francisco, Los Altos and San Anselmo.
"I am aware of three or more buyers who may be interested in acquiring all of the assets of the company," William Brinkman, a turnaround specialist who is advising Andronico's said in a filing with the court.
According to court documents and Andronico's representatives, Renovo Capital, which owns $29 million in secured debt of Andronico's, has emerged as the leading candidate to buy the grocer. The other candidates weren't identified. Renovo, which may have a leg up in the process because it holds the secured debt, couldn't be immediately reached for comment.
Renovo has proposed to pay $20 million to buy all of Andronico's. Bill Andronico said he would remain chief executive of the company should Renovo be the buyer.
Renovo is lending $5 million to the grocer. That should ease the cash squeeze until mid-October, said John Murray, principal at Cupertino-based law firm Murray & Murray, which represents Andronico's.
"The company's financial situation requires that the sale close as soon as possible," Brinkman stated in his court filing. Without access to cash, Brinkman said, "the company will not have adequate financing or resources to sustain operations."
Also at stake are the jobs of 470 Andronico's workers. About 440 work at the company's grocery stores.
If Renovo is the winning bidder for Andronico's, "some, if not a large majority" of the current employees will be retained, Bill Andronico stated in a filing with the Oakland bankruptcy court.
"This is very encouraging for the employees," said Mike Henneberry, a spokesman for United Food and Commercial Workers Local 5, which represents store staff at Andronico's and other Northern California supermarkets. "It beats the alternative."
Renovo also intends to address the tired condition of the stores.
"The buyer is willing to put a lot of money into the stores and make them top line stores with the full variety for which Andronico's is known," Murray said.
The only store that has been upgraded lately was the San Francisco outlet, which got a 2008 face lift and performed better as a result.
"There will be some serious upgrades going on," Andronico said. "The new stores will feel very comfortable, with pretty powerful merchandising."
Andronico's might have little choice but to find cash to upgrade its stores.
Safeway has launched revamps or new stores throughout the Bay Area. Big challenges also loom from Fresh & Easy, Whole Foods, Sunflower Farmers Market, Foods Co. and Sprouts Farmers Market.
These efforts come as Andronico's sales have slumped. In 2010, the company generated $121.5 million in sales and lost $3.5 million. The sales were down 11.4 percent from 2009, when the grocer earned $1.8 million, court files show.
During the first 11 months of fiscal 2011, which concluded at the end of July, Andronico's lost $5.4 million on sales of $108.4 million.
"The sale of the company really does create a new playing field for us," Andronico said. "It will make a big difference in our success."
Contact George Avalos at 925-977-8477. Follow him at twitter.com/george_avalos.