Kings Food, Balducci’s parent in bankruptcy with $75 million lead bid

By Caroline Salls

Pittsburgh, Aug. 24 – KB US Holdings, Inc., parent company of the Kings Food Markets and Balducci’s Food Lover’s Market banners, filed Chapter 11 bankruptcy Sunday in the U.S. Bankruptcy Court for the Southern District of New York to facilitate a sale of its assets, according to a news release.

The company said it has accepted a stalking horse bid from TLI Bedrock to purchase KB US for $75 million.

As part of the process, higher and better bids will be solicited, following the approval of bidding procedures.

Under the bidding procedures, interested parties will have the opportunity to bid for any of the KB debtors’ stores, either individually or on a package basis. Interested parties are requested to submit bids by Oct. 2.

The company is proposing that an auction be held on Oct. 8, if necessary, and that the sale hearing be scheduled for Oct. 22.

Proposed plan milestones require KB to file a plan and disclosure statement by Sept. 15, obtain confirmation of the plan by Dec. 3 and emerge from bankruptcy by Dec. 18.

“We are pleased to be moving forward with a sale so we can position Kings and Balducci’s for even greater long-term success,” KU US chief executive officer Judith Spires said in the release.

“Our sales and service have never been stronger; we are confident we will emerge from this process without missing a beat, well-positioned for future stability and success.”

In conjunction with the sale process, KB has obtained a commitment for $20 million in debtor-in-possession financing from its existing secured lender. Whitehorse Capital Management, LLC is the administrative agent.

The new financing, combined with cash generated from ongoing operations, will be used to support the business throughout the sale process.

The DIP facility is scheduled to mature on Dec. 11.

Interest will accrue at the Base rate plus 700 basis points or Eurodollar plus 800 bps, both with a 1% floor.

KB said it has sufficient liquidity to meet its go-forward business obligations and will operate its business as usual and pay its business partners for goods and services provided on or after the bankruptcy filing date.

As part of the Chapter 11 filing, the company has filed a number of customary first-day motions seeking approval to maintain its operations during the court-supervised process, including authority to continue payment of employee wages and benefits, as well as post-bankruptcy obligations to its vendor community.

According to court documents, KB US has $100 million to $500 million in both assets and debt.

The company’s largest unsecured creditors are Porky Products of Newark, N.J., with a $2.8 million trade claim; Fresh Pro Food Distributors/Rib Food Distributors of West Caldwell, N.J., with a $2.66 million trade claim; and Kehe Distributors LLC of Naperville, Ill., with a $2.09 million trade claim.

Proskauer Rose LLP is serving as legal counsel, Ankura Consulting Group is serving as restructuring adviser, and PJ Solomon is serving as investment banker to KB US.

KB is a Parsippany, N.J.-based operation of food retail stores. The Chapter 11 case number is 20-22962.

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