Three Bidders Offer Nearly $39M for 50 Rhodes Stores

Orlando-based Rooms to Go, the newest player in the unfolding scenario, has told the court it also plans to bid on the properties but wants the bid deadline moved to Aug. 5 from Aug. 1, according to court records.

The US Bankruptcy Court for the Northern District of Georgia in Atlanta is reviewing the offer by the three firms for an estimated 2.5 million sf of retail space in Georgia, Florida, Alabama, Tennessee North and South Carolina, court sources confirm for GlobeSt.com. The offer equates to about $776,000 per store or about $15.52 per sf, based on an average store size of about 50,000 sf, former Rhodes sales personnel in a position to know tell GlobeSt.com.

Rhodes officials, however, feel the offer is too low and may decide to ask the court for permission to sell the stores at auction instead, people intimate with the company's bankruptcy petition tell GlobeSt.com. But if Rhodes decides to go the auction route, it may have to pay a $1.2-million contract termination fee to the bidders, based on a letter of intent both companies signed last week, according to industry insiders following the Rhodes reorganization trail.

The deal with RoomStore is being watched closely by industry sources who note RoomStore itself emerged from its own Chapter 11 reorganization in June. The company operates 57 stores in six states. Like Rhodes, RoomStore was owned by Richmond, VA-based Heilig-Meyers Co. who purchased the Atlanta firm in 1996 and sold Rhodes to independent investors in 1999.

On its voluntarily filed bankruptcy petition, Rhodes listed $17 million in debt owed to 30 major creditors. The company continues to operate its stores under a debtor-in-possession status approved by the court. On July 5, Joel H. Dugan was named CEO and president of Rhodes, replacing CEO Steven S. Fishman who left for an executive position at Big Lots, industry sources close to the Rhodes scenario tell GlobeSt.com.