Alden siphoned local newspapers’ profits to buy its controlling stake in the now-bankrupt drugstore chain
By Julie Reynolds
New York hedge fund Alden Global Capital has reached the final chapter in its destruction of another American retail chain, with the 70-year-old Fred’s Pharmacy chain announcing its imminent shutdown on Monday.
Alden took its controlling stake in Fred’s in 2016 by siphoning $158 million from what would have been the cash reserves of the Digital First Media newspaper chain, which Alden also controls.
Ever since, the hedge fund has pushed Fred’s toward bankruptcy while a small group of Alden executives and associates paid themselves well — last year, four board members took a combined $997,000 in salaries and bonuses.
In addition, Alden’s founder Randall Smith appears to have benefitted by quietly moving Fred’s headquarters from Memphis to rented offices in a building Smith owns in Dallas.
On Monday, Fred’s filed for Chapter 11 bankruptcy and announced it plans to close all remaining Fred’s stores within 60 days. Plans include auctioning off Fred’s real estate by Oct. 17, and finalizing those sales by Nov. 15. Fred’s already sold its Memphis headquarters building to a Canadian Firm for $8.25 million.
“Despite our team’s best efforts, we were not able to avoid this outcome,” stated Fred’s CEO Joe Anto in a press release. Anto is a former senior vice president at Digital First Media.
An estimated 6,500 Fred’s workers will lose their jobs when the shutdown is complete, according to SEC filings.
The Fred’s bankruptcy was preceded last spring by the shutdown of all 2,100 Payless ShoeSource stores, which Alden also controlled before filing for bankruptcy in February.
With the Payless and Fred’s closures, a combined 22,000 retail jobs have been eliminated under Alden’s watch this year.
Leave a Reply
You must be logged in to post a comment.