Tesco Plc filed for bankruptcy for its US grocery store chains on Monday. The move was a part of a plan to sell most of the 167 stores to a private equity fund led by Ron Burkle. The bankruptcy filed by Tesco ended the grand entrance onto the US stage of the biggest supermarket in Britain.
Tesco was launched in the United States last 2006. Many people expected that the grocery chain would expand quickly and challenge the Wal-Mart Stores Inc, the most dominant US food retailer, said a Reuters report.
However, Tesco jumped into the US Southwest in a time when the region's real estate market had started to cool down. Tesco never generated a profit, according to filed documents to the Bankruptcy Court.
Under the agreement of the proposed sale, Fresh & Easy Neighborhood Market Inc, Tesco's affiliate, would lend Yucaipa Cos USD120 million. The money would help fund the takeover of the chain. Yucaipa anticipated operating 150 stores after the acquisition is completed.
Tesco announced that the stores which were not sold would be closed. The sale would preserve 4000 jobs out of 4187 current Tesco employees.
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