Boscov family bids to buy back stores

Members of the family that founded and ran the Boscov's department store chain for 97 years before losing it to bankruptcy in August reportedly have submitted a bid to buy back the business.

Albert R. Boscov and his brother-in-law Edwin A. Lakin are among the group who put in an offer for Boscov's Inc., in a bankruptcy auction that culminates next week with the selection of a winning bidder, Boscov said in a report published today.

The pair, who helped run the company for decades, received multimillion-dollar buyout packages when they retired in January 2006 and handed the controls to Lakin's son, chief executive officer Ken Lakin.

Boscov, who has declined requests for interviews since the company filed for Chapter 11 bankruptcy protection August 4, made his comments to the Reading Eagle, which publishes in the city where Boscov is a prominent philanthropist and where the nation's oldest family-owned department store chain is headquartered.

Terms of the family offer were unknown. And calls to Ken Lakin and to attorneys representing the chain and some of its creditors were not immediately returned today.

It had been rumored for weeks that Boscov family members were considering assembling a bid to retain control of the company.

The only other known bidder for Boscov's, which anchors shopping malls across the region as part of a 49-store chain that is being pared to 39 as part of bankruptcy proceedings, is Philadelphia private equity firm Versa Capital Management, Inc.

Versa was named lead bidder in the federal bankruptcy proceedings when it put in an $11 million cash offer last month in an overall deal valued at more than $225 million.

Some creditors have viewed a family-owned bid as more attractive because of the family's longheld desire to continue operating the chain, rather than dismembering it by closing stores and liquidating assets.

Observers have said that for a competing bid to have a chance at prevailing, it would have to include at least $15 million in cash. That is because Versa has been promised a $4 million fee if its offer is not, ultimately, chosen under the U.S. Bankruptcy Court proceedings.

A successful buyer would also have to be able to produce financing to satisfy the banks holding sizable loans to Boscov's and who have considerable sway over bankruptcy proceedings.

If the Boscov family can come up with the financing needed to pass muster with the company's biggest banks, "This could be a tremendous deal for them," said Pittsburgh attorney John C. Rodney, who specializes in bankruptcy buyouts with Thorp Reed & Armstrong, LLP.

Unsecured creditors who are also owned money, including clothing suppliers and the company that owns The Inquirer, were owed $90 million on Aug. 4, when Boscov's filed for bankruptcy protection.

Those creditors, who were prepared to receive a little more than 12 cents on the dollar under the Versa bid, expressed hope last month that a more generous competing bid would emerge as the auction proceeded.

The 39-store chain produces $1 billion in sales annually and sponsors the Thanksgiving Day Parade in Philadelphia.