NEW YORK CITY, NY - Looks like Fairway Market's parent, Fairway Group Holdings Corp., may be officially running out of steam. Sources are now reporting that Fairway may begin bankruptcy proceedings as soon as the end of May.
Bloomberg reports that “people familiar with the matter” have gone on to record saying that the company has already reached a tentative deal with creditors to restructure its debt in bankruptcy. Under the deal, Fairway’s lenders, led by Blackstone Group LP credit arm GSO Capital Partners, would provide a loan enabling it to continue operations while still in court, the anonymous sources stated.
There has yet to be confirmation on the specific terms of the loan, as discussions are still underway, but one person said that it was likely that the lenders would take over ownership of the business after Fairway completes its debt restructuring. The company, which is being advised by Greenhill & Co., would shift its focus to a profit turnaround as opposed to closing its locations in their entirety, Bloomberg reports. The company also brought on Alvarez & Marsal Inc. to advise, Bloomberg says.
Rumblings of the company’s impending bankruptcy first surfaced in February of this year, with Fairway stating that its main plan to raise funds was to continue to open new locations. A report by The New York Post noted that the company has had a series of “significant losses,” a total of more than $300 million over the past five years and $35.7 million just in the quarter ended December 27th.
As we’ve previously reported, Fairway has received several warnings about being delisted from the Nasdaq Stock Market and had recently been downgraded by Moody’s for a second time in a six month period.
The company’s shares have dropped 94 percent in value in the past 12 months, according to Bloomberg. Fairway was traded at 40 cents as of Friday’s close, falling over 47 percent to land at 19 cents as of 1:00 PM EDT.
Representatives of Blackstone, Fairway, Greenhill, and Alvarez & Marsal have yet to comment on the reports.
