Market Basket leaders make effort for deal this week
No firings or closings while talks continue; a bidder weighs top role for ousted Demoulas
With Market Basket’s finances growing increasingly dire, family members fighting over the grocery chain have promised to make an all-out effort to reach a deal to rescue the company by the end of the week, according to people briefed on the discussions.
Warring factions of the Demoulas family made that commitment following several hours of negotiations late Sunday, brokered by Governor Deval Patrick and Governor Maggie Hassan of New Hampshire.
Executives of the company have agreed to hold off on firing employees or closing stores to allow some time for the discussions to play out, according to the people who were briefed. The sides are negotiating a sale of Market Basket, as well as efforts to stabilize the embattled company’s operations and finances.
Arthur T. Demoulas is trying to buy the 50.5 percent of the chain owned by his cousin and longtime foe, Arthur S. Demoulas, and other relatives.
Meanwhile, another potential suitor, the parent of Hannaford Bros. Co., has spoken to Arthur T. about managing the company if it is successful in buying Arthur S.’s shares, according to a person who was not authorized to speak publicly about the matter.
Arthur T. was fired as president in June by a board controlled by his cousin.
Market Basket is losing millions of dollars a day because of customer boycotts and an employee walkout over Arthur T.’s dismissal.
The walkout has prevented fresh food from reaching stores. Industry analysts said the 71-store chain cannot continue to operate much longer under the current conditions.
“The company’s cash position is lousy,” said Kevin Griffin, publisher of the Griffin Report on Food Marketing. “It’s in a really tough spot right now.”
More evidence of the financial troubles came in a letter posted Monday on a Facebook page critical of the company’s current management, in which the chief executive of a major seafood supplier announced that his firm was cutting its ties with Market Basket.
Boston Sword & Tuna’s chief executive, Tim Malley, said in an interview that his company normally sells $10 million worth of seafood to Market Basket annually. But in recent weeks, he said, payments did not arrive on time. He said one check had to be returned because Market Basket overpaid him by $415,000.
Malley said he decided to disclose the problems to show the economic damage being inflicted on the businesses that rely on Market Basket. “We thought about the other vendors like us that were losing thousands of dollars,” he said.
A spokesman for Market Basket said the company had worked with Boston Sword & Tuna to try to find a solution. He said in a statement that the problems with vendors were inevitable, given the decision by company employees who have refused to work, in solidarity with Arthur T.
“The longtime employees that ran Market Basket’s buying and distribution system walked out on their jobs, their customers, and their vendors on July 18,” the statement said.
“We do understand the problems that the shutdown of the distribution system has caused Market Basket’s vendors who are caught in the middle of this situation. We have been diligently working with vendors to limit the damage the walkout has caused.”
Market Basket’s board met Monday in Boston to address the crisis. It is unclear how much longer the company can continue to pay employees and keep stores open as the daily losses mount. A person briefed on the company’s finances said it has begun exploring a line of credit to keep funding basic operations.
After brokering negotiations Sunday night, Patrick and Hassan issued statements saying that Demoulas family members were making progress in resolving their dispute. But no deal appeared imminent Monday, and Patrick declined to discuss the matter.
Other than the vow to work toward an agreement by Friday, there were no details on Monday about when or where the two sides would meet again.
The Demoulas cousins have been fighting over ownership and management of the company for more than two decades. Arthur T., whose side of the family owns 49.5 percent of the business, has offered to return as president and buy the rest of the company’s shares, all of which are owned by Arthur S. and other rival family members.
The negotiations on Sunday, which took place in Patrick’s office in Springfield, included Arthur T. and Arthur S., board chairman Keith Cowan, and Tina Albright, representing one of the shareholders on Arthur S.’s side of the family.
It is unclear when or if the governors will convene another meeting to try to reach a deal. Their involvement signaled a final push to end the extraordinary showdown over the company, which has put thousands of Market Basket’s part-time employees out of work and is threatening the jobs of thousands of full-time workers.
Market Basket has more than 25,000 employees in New England. The vast majority of its employees work at stores and other facilities in Massachusetts and New Hampshire.
The Demoulas family has been at odds since the 1990s, when Arthur S.’s side of the family won a lawsuit finding that Arthur T.’s father, Telemachus, had defrauded them out of their shares in the company. A judgment awarded Arthur S. and his relatives $500 million, but it kept the ownership of the company almost equally divided between the family factions fighting over it.
Despite the feud, the company has prospered in recent years. It is reported to have had revenue of $4.6 billion in 2013 and is ranked by Forbes as the 127th-largest private company in the United States.
Many onlookers have been confounded by the continued inability of Arthur S. and Arthur T. to reach a deal to save the company from financial ruin.
“I just can’t understand why you would want to kill the golden goose,” Griffin said.
“This is a business these two inherited. They were born into the lucky club, and you wonder why they can’t wise up and get their act together.”