Shopko Awaits Bankruptcy Court’s Approval of its Sale of Optical Business to Monarch Alternative Capital

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GREEN BAY, Wis.—Shopko announced this week that it has tentatively accepted an $8.6 million bid for its optical business from Shoptikal LLC, an affiliate of Monarch Alternative Capital LP, and that the bid meets the terms and conditions previously set forth in its court-filed term sheet. The offer must be formally approved by U.S. Bankruptcy Court for the District of Nebraska, which is scheduled to review the proposed transaction and hear from opponents of the deal beginning at 10 a.m. today (April 18), according to a court filing this week.

Shopko, which had filed for bankruptcy protection in January, announced the planned auction of its retail optical business and optical lab in a court filing late last week, as VMAIL reported.

Monarch, a private investment firm with offices in New York and London, focuses primarily on the debt of distressed and bankrupt companies and has “a long standing and successful track record in the distressed debt asset class,” according to its website. The purchase price it has offered for the optical assets “shall be cash in the amount of $8.5 million, plus the assumption of the assumed liabilities,” the court filing noted.

Last month, Monarch partnered with the real estate firm Raider Hill Advisors to buy a portfolio of 79 former Shopko store properties across the Midwest, according to an announcement at the time.

However, there may be hurdles to Monarch moving quickly to close the proposed deal for Shopko’s optical business. In a separate court filing, Wells Fargo has noted that the sale of the optical business cannot be carried out without its consent, under the terms of Shopko’s bankruptcy financing deal, and that it cannot consent to the deal without “an opportunity to review the definitive documentation related to the sale.” It could not be determined at press time whether Wells Fargo, subsequent to its court filing, had an opportunity to review the terms of the deal to its satisfaction and withdraw its opposition motion.

Shopko, which operated about 135 optical departments as recently as last year, ranked as the No. 17 retailer in the VM Top 50 U.S. Optical Retailers report with sales of almost $100 million annually.

Shopko began opening freestanding optical stores in late 2018 and it had five of these locations operating as of January.

According to its court filing this week, Shopko said it expects that Monarch will take over 26 real property leases that are unexpired, and that it would acquire “all tangible property, accounts, machinery, equipment and inventories associated with the company’s optical laboratory in De Pere, Wis."

The filing also notes that the buyer will consider extending employment offers “to substantially all of the employees of the optical business effective as of the sale closing, who are primarily engaged in the optical business at the locations being transferred to buyer.”