YOUNGSTOWN Phar-Mor execs, panel eye companies' bids

Choosing a lead bidder would start a process that would result in the sale of Phar-Mor stores.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Several companies are vying to be the lead bidder in an upcoming auction of Phar-Mor's stores, warehouse and other assets.
Phar-Mor executives and its unsecured creditors committee are reviewing bids from several companies and may agree on the lead bidder "in a matter of days," said John Ficarro, senior vice president of the discount drugstore chain.
Their choice would begin a process that would lead to an auction of company assets in U.S. Bankruptcy Court in Youngstown.
Phar-Mor stores are likely to be taken over by an existing company, although Ficarro said it would be possible for a bidder to form an independent company to run the stores.
Only bidder known
The only known bidder so far is Snyders Drug Stores of Minnesota. That company is owned by the Katz Group of Canada, which is the seventh-largest drugstore chain in North America.
Snyders said in court documents that it wants to take over at least 30 of Phar-Mor's 73 stores and the Tamco distribution center in Austintown.
Ficarro said he couldn't talk about the other bidders. Court documents say that Abbey Butler and Melvyn Estrin, co-chief executives of Phar-Mor, are interested in making a bid for the company, but Ficarro said he couldn't comment on whether a bid from them is being considered.
Company executives and the creditors committee are working together after the committee complained that Butler and Estrin weren't giving full consideration to the Snyders' bid because of their own interest.
Working together
Ficarro said the two groups are working closely without the contention that existed before. Brett Miller, attorney for the creditors committee, could not be reached to comment.
A lead bidder selected by the groups would have to be ratified by Judge William Bodoh. Known as a stalking horse bidder, this bidder then would receive compensation if it is outbid.
Ficarro said the problem facing the people reviewing the bids is that the bids vary in the number of stores being sought and how the sale price would be paid.
Ficarro said the groups are working as quickly as possible but it is too early to say when an auction would take place.
Phar-Mor, which filed for bankruptcy protection in September, is headed toward an auction because it continues to lose millions of dollars. Losses are so bad that employees will receive incentive bonuses if the company loses no more than $12.9 million in the first six months of this year.
It already has closed 65 stores after filing for bankruptcy protection.
Phar-Mor has about 200 employees at its downtown headquarters and about 300 at Tamco.
Seeking approval of funds
In another matter, Nadler & amp; Nadler of Youngstown, one of the legal firms working for Phar-Mor, has asked the court to approve $173,000 in fees and $3,000 in expenses for work done from Feb. 1 to May 31. It is seeking total payment of $107,000 because it already received partial payment under an earlier court order. Its lawyers are billing at between $155 an hour and $245 an hour.
Nadler & amp; Nadler received approval for payment of $254,000 for fees and $13,000 for expenses for work done through Jan. 31 on the case.
shilling@vindy.com