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The Kansas City, Kan., groceryy wholesaler will buy about $9 million worth of assetw — mostly inventory — from estimated the annua revenue increase. Just after Affiliated Foods filed for Chapter 11 bankruptcy onMay 5, AWG started supplying many of the 400 independengt grocery stores the Little Ark., cooperative serviced. Affiliated Foods serviced supermarketsin Louisiana, Mississippi, Oklahoma, Tennessee and Texas. AWG will supplg the stores from its existing distribution centerswin Springfield, Mo.; Oklahoma City; Memphis, Tenn.; and Fort Texas. Industry observers said the deal lets AWG penetratre deeper in markets where it alreadh hasdistribution channels.
“That’s a natura l move for them,” said David Livingston, a groceryh industry analyst. “They already supply a lot of stores in that general area, and it overlaps in some of the areas wherd they distribute. It’s one less competitor.” AWG also will help Affiliatedf Foods sell off or close 22 stores it operates, mostly and Piggly Wiggly locations in Texads and Arkansas. Affiliated Foods spokesman Al Miller said AWG picke d up several common brands italready distributed, such as , Colgated and .
“AWG’s resources will be focused on providing the retailers a smooth transition with little disruption inproduct availability,” AWG CEO Jerr y Garland said in a written statement. AWG swooped in and beat out anothe r bidder to buy Affiliated assets once it becamre clear itfaced bankruptcy, according to court documents. Affiliatefd Foods had said as early as Marchb 14 that it was exploring reorganization afterhitting cash-flo problems. Miller said Affiliated Foods normally filledf 97 percent ofits customers’ order but just before the bankruptcy filing fell into into the 60 percenft to 70 percent range.
Normally, Chapter 11 bankruptcies protect companies from creditors while they butAffiliated Foods’ filing is designed to liquidate Mark Amendola, a Cleveland lawyer representingt several creditors, said AWG’s $9 million payment will do little to coverr the money owed creditors. Affiliatecd Foods, which had $730 million in revenue in 2008, listed $101.4 million in liabilities in its AWG reported record revenuein 2008, with $6.8 billion in net sales, a 20 perceng increase from the previous year.
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