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At a hearing Thursday in Wilmington, Del., U.S. Bankruptcy Judge Kevin J. Carey said he would approve guidelines that will govern the proposed sale, which would save about 4,000 employees' jobs, according to Bloomberg. Potential buyers must submit an offer by Nov. 15. The company would hold the auction if it receives a competing qualified bid, followed by a Nov. 21 hearing to seek court approval of the auction winner.
The El Segundo-based retailer filed for bankruptcy on Sept. 30. In the filing, the struggling chain cited debt of between $500 million and $1 billion.
Under the proposed deal, a Tesco affiliate would lend the Yucaipa unit $120 million to help fund the acquisition, according to court papers. Tesco would get warrants to buy as much as 10 percent of the equity in the reorganized chain. Fresh & Easy would get 22.5 percent of the equity in the reorganized chain if the Yucaipa affiliate's offer prevails, the news outlet reported.
The agreement also calls for The Yucaipa Cos. to take on some of Fresh & Easy's liabilities. The liabilities are valued at about $130 million in court papers and may exceed $200 million, according to Lisa Laukitis, a lawyer for Fresh & Easy.
As CSNews Online reported in April, Phillip Clarke, CEO of London-based Tesco, confirmed the company's plans to exit the U.S. market due to the continued underperformance of the Fresh & Easy stores. Tesco had to take an approximate $1.5-billion writedown as part of the exit.
Ron Burkle, managing partner of Yucaipa, has said he plans on continuing to build Fresh & Easy into a "next-generation convenience retail experience," providing busy consumers with more local and healthy access for their daily needs.