Richmond, Va - Richfood Holdings, Inc., the leading wholesale food distributor in the Mid-Atlantic region, and Farm Fresh, Inc., a privately held supermarket chain based in Norfolk, Virginia, today announced that they have signed a definitive purchase agreement in connection with Richfood's previously announced plan to acquire substantially all of the assets of Farm Fresh.
The transaction is expected to be effected through a prepackaged voluntary reorganization of Farm Fresh under Chapter 11 of the U.S. Bankruptcy Code or other consensual proceeding. Completion of the transaction is subject to approval of the reorganization plan by the Bankruptcy Court and the holders of Farm Fresh's senior notes as well as required regulatory approvals and other customary closing conditions. Farm Fresh confirmed that the holders of a majority of the outstanding principal amount of its senior notes have indicated that they support and intend to vote in favor of the transaction. Richfood and Farm Fresh confirmed that they expect the transaction to close in early 1998.
In the planned transaction, a newly formed subsidiary of Richfood will purchase substantially all of the assets and assume certain liabilities, including all trade liabilities, of Farm Fresh. Under the terms of the purchase agreement, Richfood will not assume Farm Fresh's senior notes or other indebtedness for money borrowed, or its lease obligations for previously closed stores or four currently-operated stores that will be closed in connection with the proposed sale. The anticipated purchase price is expected to consist of approximately $220 million cash, plus the value of certain assumed capital leases, plus 1.5 million warrants for the purchase of shares of Richfood common stock at an exercise price of $25 per share with a term of five years following issuance. The exact amount of the cash purchase price will vary depending on changes in Farm Fresh's working capital and the capital lease obligations assumed by Richfood. Upon completion of the acquisition, Farm Fresh will operate as a separate, wholly owned subsidiary of Richfood.
Richfood Holdings, Inc., headquartered in Richmond, Virginia, is the largest wholesale food distributor in the Mid-Atlantic operating region. The Company provides a full range of grocery, dairy, frozen food, produce, meat and nonfood items to chain and independent retailers throughout the region. The Company also operates a chain of seventeen retail grocery stores in the metropolitan Baltimore area.
Farm Fresh operates 47 food stores in Hampton Roads, Richmond, and the Shenandoah Valley areas of Virginia. With over 5,000 associates in the area, it is one of Hampton Roads' largest employers.
Forward-looking statements in this news release, if any, are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In the case of Richfood, certain important factors that could cause results to differ materially from those anticipated by the forward-looking statements are discussed from time to time in reports filed by the Company with the Securities and Exchange Commission.
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