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Smart & Final Makes Play for Some Santa Barbara County Haggen Locations

Haggen will ask bankruptcy court to approve purchase agreements with Gelson’s Markets, too

Haggen proposes selling some of its stores to Smart & Final and Gelson’s Markets, if bankruptcy courts approve the move.
Haggen proposes selling some of its stores to Smart & Final and Gelson’s Markets, if bankruptcy courts approve the move.  (Smart & Final photo)

Two of six local Haggen grocery stores could soon operate under the Smart & Final grocer brand.

The Bellingham, Wash.-based grocery chain on Monday announced plans to sell some of its newly acquired struggling stores to Smart & Final LLC and Gelson’s Markets — that is, if bankruptcy court officials approve the move next month.

Haggen filed for bankruptcy protection from creditors in September to maintain operations and to find buyers for some of the 146 stores it picked up across five states from AB Acquisition LLC and Safeway Inc., the entity created when Safeway (owner of Vons) merged with Albertsons.

Haggen struggled to find a foothold in local markets after growing from 18 regional locations to 164.

The chain announced it plans to focus around just 37 stores in Washington and Oregon once its Chapter 11 process is complete.

This week, Haggen filed motions to begin soliciting interest from companies looking to purchase any of the soon-to-close stores, six of which are in Santa Barbara County.

Smart & Final has already shown interest in 28 stores in California and Nevada, including the former Vons at 850 Linden Ave. in Carpinteria and the former Albertsons at 3943 State St. in Santa Barbara.

Haggen has also signed an asset purchase agreement with Gelson’s Markets for eight stores in California, the closest of which is in Thousand Oaks.

Both agreements are subject to bankruptcy court approval, and there’s no word yet on what would become of four other Haggen stores in Santa Barbara, Goleta and Lompoc.

Los Angeles-based Smart & Final operates 250 grocery and foodservice stores under three different banners — Smart & Final, Smart & Final Extra! and Cash&Carry Smart Foodservice — in California, Oregon, Washington, Arizona, Nevada, Idaho and Northern Mexico.

The chain has two local stores in Santa Barbara (217 E. Gutierrez St.) and Santa Maria (1721 S. Broadway).

Gelson’s Markets, which boasts 18 full-service specialty grocery stores in Southern California, has a Santa Barbara store at 3305 State St.

In Monday’s announcement, Haggen confirmed plans to start going out of business sales in non-core stores and to exit markets during the last weeks of November.

Haggen is requesting a court hearing on Oct. 19 to determine global bid procedures, which could include interested parties notifying the court no later than Oct. 26 and submitting bids in time for an auction Nov. 9.

All dates and times were up in the air as Haggen works with the court and Sagent Advisors, which is coordinating its sale process.

“The sale process has been designed to be fair and transparent in order to derive the highest bid for the stores and to maximize value for the estate and creditors in an orderly process,” the company said in a news release.

“The procedures will allow the sale auction(s) to be conducted in a controlled, fair and open fashion that will encourage participation of financially capable buyers.”

Those interested in learning more about the process can contact Sagent at 212-904-9400.

Haggen has blamed its failure on Albertsons in a $1 billion lawsuit, which alleges the fellow grocer sabotaged its entrance into new markets by providing false retail data for pricing, taking store inventory and more.

Since expanding, Haggen has cut employee hours and laid off workers at some of its stores.

The company is also facing several lawsuits, including wrongful termination of a former employee at the Carpinteria Haggen, workers rights’ violations and a class-action complaint for letting go 14 developmentally disabled employees.

Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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