Alaska Marketplace operators seek $7 million from Safeway

Posted: Tuesday, March 06, 2001

ANCHORAGE (AP) -- Operators of six now-closed Alaska Marketplace stores have filed for arbitration against Safeway Inc., the former owner of the stores.

Seattle-based Associated Grocers Inc. and Northwest Retail Ventures LLC filed a demand for arbitration last month with the American Arbitration Association, said Robert Hoyt, Northwest Retail Ventures chairman.

''Arbitration is something we filed because we think there's some things that need to be explained,'' Hoyt told the Alaska Journal of Commerce.

Hoyt contends that Safeway didn't live up to its part in a deal with the Alaska attorney general's office to divest seven stores.

''They handed us stores that were doomed from the start,'' he said. ''Safeway let the stores run down prior to the sale.''

Associated Grocers and Northwest Retail Ventures are seeking $7 million in monetary damages based on an analysis of losses incurred plus expenses including attorney's fees as well as equitable relief in cash, Hoyt said.

Richard Near, Safeway's Alaska general manager, said he could offer few details.

''They have their claims. We have ours,'' he said.

Attorneys continue to negotiate a potential settlement or the case could go to court, he said.

State officials required Safeway to sell six former Safeway stores and one Carrs store in 1999 as part of a $330 million deal to acquire Alaska's largest grocer, Carr Gottstein Foods Co.

In October 1999 Northwest Retail Ventures of Seattle, including investors Associated Grocers and Bristol Bay Native Corp., agreed to buy six of the seven divested stores.

But Alaska Marketplace stores suffered heavy losses. Last December, 14 months after the purchase, the last of the chain's stores were closed.

Alaska Marketplace operators say Safeway breached terms of its sales agreement and terms laid out by the attorney general's office. That agreement called for Safeway to maintain the viability and competitiveness of the stores to be divested until the sale was completed.

Among other claims, Hoyt said Safeway allowed some shelves to go bare, causing customers to shop elsewhere before Alaska Marketplace took over operations.

''In reality we thought we'd bought viable stores,'' Hoyt said. ''A lot of money was lost by investors and suppliers, and nobody got the results they were looking for.''

Some of the $7 million sought in the arbitration would be used to pay creditors, he said.

The state attorney general called for the divested stores to be operated as grocery stores for three years from the date the deal was finalized in February 1999.

Hoyt said his company has been unsuccessful in finding any other grocers interested in buying the stores. Hoyt said he would like to sell the closed stores to a nongrocery player to cover losses.

Assistant attorney general Ed Sniffen might allow a sale to a nongrocery company ''only if we were convinced there was no possibility or that it would be very unlikely that there would be another grocery store interested,'' Sniffin said.

Arbitrators are now being chosen and the arbitration process could take several months, said Hoyt who joined Associated Grocers in July.

''We feel we're the victim here. We're not going to take it lying down. We got skinned good,'' he said.

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