UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 9)*
Spartan Stores, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
846822104
(CUSIP Number)
Michael Emanuel, Esq.
c/o Loeb Partners Corporation
61 Broadway, N.Y., N.Y., 10006 (212) 483-7047
(Name, address and Telephone Number of Person Authorized to Receive Notices
and Communications)
September 26, 2005
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check
the following box if a fee is being paid with statement [ ]. (A fee is not
required only if the following reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described is Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.) Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent. *The remainder of this cover page shall be filled out for
a reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page. The information
required on the remained of this cover page shall not be deemed to be "filed"
for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the Notes).
SCHEDULE 13D
CUSIP NO. 846822104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Loeb Partners Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC, O
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 44,760 Shares of Common stock
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 33,695 Shares of Common stock
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 44,760 Shares of Common stock
PERSON WITH 10 SHARED DISPOSITIVE POWER
33,695 Shares of Common stock
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
78,455 Shares of Common stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.38%
14 TYPE OF REPORTING PERSON*
CO, BD, IA
SCHEDULE 13D
CUSIP NO. 846822104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Loeb Arbitrage Fund
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC, O
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES 947,433 Shares of Common stock
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -----
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 947,433 Shares of Common stock
PERSON WITH 10 SHARED DISPOSITIVE POWER
-----
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
947,433 Shares of Common stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.62%
14 TYPE OF REPORTING PERSON*
PN, BD
SCHEDULE 13D
CUSIP NO. 846822104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Loeb Offshore Fund Ltd.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC, O
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF 7 SOLE VOTING POWER
SHARES 88,419 Shares of Common stock
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY --------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 88,419 Shares of Common stock
PERSON WITH 10 SHARED DISPOSITIVE POWER
-------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
88,419 Shares of Common stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.43%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP NO. 846822104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Loeb Marathon Fund LP
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC, O
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 124,264 Shares of Common stock
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -----
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 124,264 Shares of Common stock
PERSON WITH 10 SHARED DISPOSITIVE POWER
-----
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
124,264 Shares of Common stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.60%
14 TYPE OF REPORTING PERSON*
PN
SCHEDULE 13D
CUSIP NO. 846822104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Loeb Marathon Offshore Fund, Ltd.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC, O
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF 7 SOLE VOTING POWER
SHARES 82,430 Shares of Common stock
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -----
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 82,430 Shares of Common stock
PERSON WITH 10 SHARED DISPOSITIVE POWER
-----
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
82,430 Shares of Common stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.40%
14 TYPE OF REPORTING PERSON*
CO
Item 1. Security and Issuer.
------ -------------------
This statement refers to the Common Stock of Spartan Stores, Inc., 850 76th
Street Southwest, Grand Rapids, MI. 49518.
Item 2. Identity and Background.
------ -----------------------
Loeb Arbitrage Fund ("LAF") is a New York limited partnership. It is a
registered broker/dealer. Its general partner is Loeb Arbitrage Management,
Inc., ("LAM"), a Delaware corporation. Its President is Gideon J. King. The
other officers of LAM are Thomas L. Kempner, Chairman of the Board, President,
Peter A. Tcherepnine, Vice President, Edward J. Campbell, Vice President. Loeb
Partners Corporation ("LPC") is a Delaware corporation. It is a registered
broker/dealer and a registered investment adviser. Thomas L. Kempner is its
President and a director and its Chief Executive Officer. Norman N. Mintz is a
Vice President and also a director. Gideon J. King is Executive Vice President.
Loeb Holding Corporation ("LHC"), a Maryland corporation, is the sole
stockholder of LAM and LPC. Thomas L. Kempner is its President and a director as
well as its Chief Executive Officer and majority stockholder. Norman N. Mintz
and Peter A. Tcherepnine are also directors. Loeb Offshore Fund, Ltd., ("LOF")
is a Cayman Islands exempted company. Loeb Offshore Management, LLC ("LOM") is a
Delaware limited liability company, a registered investment adviser and is
wholly owned by Loeb Holding Corporation. It is the investment adviser of LOF.
Gideon J. King and Thomas L. Kempner are Directors of LOF and Managers of LOM.
Loeb Marathon Fund ("LMF") is a Delaware limited partnership whose general
partner is LAM. Loeb Marathon Offshore Fund Ltd. ("LMOF") is a Cayman Islands
exempted company. LOM is the investment adviser of LMOF. The principal address
of each of LAF, LAM, LPC, LHC, LOF, LOM, LMF and LMOF is 61 Broadway, New York,
New York, 10006. All of the individuals named are United States citizens. None
have been, within the last five years, convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding been or are subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Compensation.
------ ------------------------------------------------
Shares of Common Stock were acquired by LAF, LPC, LMF, LOF and LMOF in margin
accounts maintained with Bear Stearns Securities Corp.
Item 4. Purpose of Transaction.
------ ----------------------
LAF, LPC, LMF, LOF and LMOF ("Loeb") have acquired shares of Common Stock for
investment purposes. Loeb reserves the right, consistent with applicable law, to
acquire additional securities of the Issuer (whether through open market
purchases, block trades, private acquisitions, tender or exchange offers or
otherwise). As previously reported, Loeb intends to review its investment in the
Issuer on a continuing basis and may engage in discussions with management or
the Board of Directors of the Issuer concerning the business, operations and
future plans of the Issuer. Depending on various factors, including, without
limitation, the Issuer's financial position and investment strategy, the price
levels of the Common Stock, conditions in the securities markets and general
economic and industry conditions, Loeb may in the future take such actions with
respect to its investment in the Issuer as it deems appropriate including,
without limitation, seeking further Board representation, making further
proposals to the Issuer concerning the capitalization and operations of the
Issuer, purchasing additional Common Stock, selling some or all of its Common
Stock, engaging in short selling of or any hedging or similar transaction with
respect to the Common Stock or changing its intention partially or entirely with
respect to any and all matters referred to in Item 4. Loeb's current position
with respect to the Issuer is reflected in the following letter that was sent to
the Issuer's Board of Directors:
Attn: Board of Directors of Spartan Stores, Inc.
On February 14, 2005 we wrote a letter expressing our wish that Spartan Stores,
Inc. hire a banker to explore strategic alternatives with an emphasis on selling
the company to the highest bidder. We outlined Spartan's strong free cash flow
generation and the folly of low margin acquisitions in the retail space that
endanger the free cash flow of the company and do nothing to capitalize on the
fact that Spartan is the owner of a coveted distribution system in Michigan. We
stated that the application of both a 4.5x multiple to Retail EBITDA and a 6.5x
multiple to Distribution EBITDA would produce a private market value of north of
$13 per share. We expressed our opinion that Spartan's restructuring is largely
over and that the company is at an inflection point at which it needs to focus
on maximizing the value of the assets.
In a later non-public letter to the board in April 2005, we asked that the
onerous 120-day advance notice provision for submitting shareholder proposals be
amended so that owners of the company are not differentiated from other owners
because of an unusual and superfluously technical provision. We pointed out that
the shareholder proposal process is one of the very few mechanisms whereby
owners can be sure that they are not being placated by management teams that
issue out such legally motivated catch phrases as, "be assured that our board is
always considering ways to maximize shareholder value." We wrote: "shortening
the 120 day requirement will allow more ideas to be presented and give
shareholders a chance to vote on issues that may benefit the company. The
shareholder franchise should not be stymied by an arcane provision that
distinguishes between owners that bought shares before 120 days prior to the
notice of the proxy statement and owners that bought shares after the notice of
the proxy statement." We asked to replace a board member that resigned.
We have attempted to be productive, and yet we are treated like detritus. The
company did not so much as request a meeting with our nominee. The company has
never asked us to come to their headquarters and understand why their responses
to our ideas suggest a state of catatonic ignorance of a path to value creation.
The company instead hides behind Reg FD and pretends we do not exist, despite
the fact that we are the largest owner of the company. Craig Sturken, when he
deigns to call us back (which is rare to never), says things such as, "I am a
man of integrity," and declines any discussions of maximizing value. We are
relegated to speaking with a lawyer who says that we are avoided because we
"trade the stock." We do in fact "trade the stock"; we sold stock in the low
teens because we were in the dark as to whether the company even remotely cares
about their largest owner's desire to create value. We sold in the low teens
because this management team will not affirmatively declare that they are for
us, the owners. Other shareholder calls are taken, and these shareholders "trade
the stock." In fact, other shareholders have been invited to meet with
management and have met with management despite the fact that they "trade the
stock." Instead of plotting a course to value creation, the company, in a fit of
logorrhea, delivers promotional language in its press releases such as (when
referring to fiscal year 2005): "This performance improvement created a
substantial increase in value for all our constituents, including shareholders,
customers, suppliers, and our employees." Since this proclamation, the stock is
down 16%.
On May 3, 2005 dealREPORTER reported that Spartan was actively looking to sell
the company and had hired Bear Stearns to run the auction process. More
recently, an analyst at a major brokerage firm and a reporter for the financial
press have suggested that Spartan will acquire the Farmer Jack Stores from The
Great Atlantic & Pacific Tea Company (A&P). The management and board of Spartan
should wake to observe both that the stock reacts positively when a sale is
contemplated by the capital markets and that the stock declines when our
precious cash flow is at risk of the types of turnaround acquisitions that
torpedoed this company to begin with. The management and board should tell it
like it is, and inform shareowners of the steps they are taking to maximize
value.
As your stock has languished recently we will once again attempt to be
productive and suggest a path towards lasting value. Surely, the board is
familiar with the concept of a dividend. By our internal projections, Spartan
will generate free cash flow of over $20 million in 2006. This free cash flow
number is after deducting $27 million of capex, $18 million of which is pumped
into the low margin retail business. Spartan is spending shareholder cash to
build gas stations and new stores despite the inevitable competition from big
box retailers. If $10 million of this capex would be eliminated, the company
would generate free cash flow in an amount that is 20% of its equity market
capitalization. If Spartan paid out approximately 75% of its free cash flow,
then Spartan would have a dividend yield of 7.5% at a stock price of $9.43
without impacting leverage. At a stock price of $10 Spartan would trade at 4.4x
our estimate of 2006 EBITDA, have a free cash flow yield of 10% inclusive of the
ugly capex program mentioned above, and have a dividend yield of 7%. In lieu of
a regular dividend payment Spartan could afford to pay a special dividend of $3
per share and only increase its net debt leverage to two times its EBITDA. The
board must consider simple options such as dividend payments in order to elevate
the company beyond the status of a value trap. Indeed, the free cash flow would
improve further if Spartan's capital expenditures were brought under control.
The stock is down because the company is silent on the issue of taking direct
steps to maximize value. While any reasonable board member would urge the
company to sell if it could at this point, we see even other avenues to value
creation besides dividends and a sale of the company. If it is true, as reported
in the press, that management feels compelled to grow the retail business, then
let this management team buyout the retail stores from the company and let
shareholders reap the benefits of a sale of the distribution business. The
retail stores, valued at 4.5x times EBITDA or slightly under $2 million per
store, would garner a price of approximately $130 million or $6 per share. Based
on discussions we have had with industry players, the distribution business
could be readily monetized at between 6.5x and 8x EBITDA, which would equate to
approximately $230 million or $11 per share. Before giving effect to taxes,
these two asset sales would result in a per share valuation of $14 after
subtracting our estimate of 2006 year end net debt. Shareholders would make
money, and Craig Sturken would be free to merge Spartan's retail stores with
Farmer Jack's stores in order to satisfy any nostalgia that he might have with
respect to the Farmer Jack assets.
There are many possibilities when a company turns out copious amounts of free
cash flow. Yet there are no possibilities if a board is blind to the reality
that companies must work actively to exploit their positive characteristics.
Comforting verbiage in public filings is fine and well, but we will not tolerate
a board and management team that ignores us, that does not speak to pointed and
detailed speculation in the press, and, most important, does not openly take
action to exploit the free cash flow story that is Spartan Stores, Inc. We are
more than happy to be wrong, so if you are in the process of contemplating,
through some formal process, a sale of the company, a recapitalization, or some
other step that immediately creates value, please inform the owners of the
company by way of a public press release instead of fostering a declining stock
price and mystery. If your stock price does not go up it is your fault, because
something as simple as a solid dividend yield would create value. We previously
set aside our nominations for board members and our shareholder proposal because
we did not think it appropriate to prosecute a proxy fight and pursue
shareholder proposals if we were selling large amounts of stock. Now, because of
the shroud of mystery that management and the board have created, the stock is
trading back below $10 and owners are suffering the apathy of Spartan's
leadership. It is not so complex. The choice is clear: pay out all or a large
part of your cash flow and/or sell parts or all of your company, or be doomed to
the declining value trap status. Once again, we must consider shareholder
proposals and director nominations if the professionals that run Spartan do not
equate their fiduciary duties with actions to make the stock trade closer to our
estimate of its fair value. If Spartan does take immediate action to maximize
value then language such as that employed in their press releases will not come
off as fearful, promotional, and hollow.
LOEB PARTNERS CORPORATION
By: __________________________________
Gideon J. King
Item 5. Interest in Securities of the Issuer.
------ ------------------------------------
(a)The persons reporting hereby owned the following shares of Common Stock as
of September 7, 2005. Shares of Common Stock
Loeb Arbitrage Fund 947,433
Loeb Partners Corporation* 78,455
Loeb Offshore Fund Ltd. 88,419
Loeb Marathon Fund LP 124,264
Loeb Marathon Offshore Fund, Ltd. 82,430
-----------
1,321,001
The total shares of Common Stock constitute 6.44% of the 20,516,000 outstanding
shares of Common Stock as reported by the Issuer.
-------------------------
*Including shares of Common Stock purchased and sold for the account of one
customer of Loeb Partners Corporation as to which it has investment discretion.
(b) Loeb Arbitrage Fund has the sole power to direct the vote and the sole power
to direct the disposition of the 947,433 shares of Common Stock that may be
deemed to be beneficially owned by it. Loeb Partners Corporation has the sole
power to direct the vote and the sole power to direct the disposition of 44,760
shares of Common Stock that may be deemed to be beneficially owned by it and
shared power to direct the vote and direct the disposition of 33,695 shares of
Common Stock that may be deemed to be beneficially owned by it.* Loeb Offshore
Fund Ltd. has the sole power to direct the vote and the sole power to direct the
disposition of the 88,419 shares of Common Stock that may be deemed to be
beneficially owned by it. Loeb Marathon Fund LP has the sole power to direct the
vote and the sole power to direct the disposition of the 124,264 shares of
Common Stock that may be deemed to be beneficially owned by it. Loeb Marathon
Offshore Fund, Ltd. has the sole power to direct the vote and the sole power to
direct the disposition of the 82,430 shares of Common Stock that may be deemed
to be beneficially owned by it.
-------------------------
*Power is shared with respect to shares of Common Stock purchased and sold for
the account of one customer of Loeb Partners Corporation as to which it has
investment discretion.
(c) The following purchases and sales of Common Stock have been made:
Purchases of Common Stock
Holder Date Shares Average Price
Loeb Marathon Fund 09-01-05 2067 $10.54
Holder Date Shares Average Price
Loeb Marathon Offshore 09-07-05 1819 $10.64
Fund Ltd.
Sales of Common Stock
Holder Date Shares Average Price
Loeb Marathon Fund 09-07-05 1819 $10.61
Holder Date Shares Average Price
Loeb Marathon Offshore 09-01-05 2067 $10.51
Fund
All reported transactions were effected on Nasdaq.
(d) Not applicable.
(e). Not applicable.
Item 6.Contracts, Arrangements, Understandings or Relationships with Respect to
the Issuer.
None.
Item 7. Materials to be Filed as Exhibits.
Previously filed.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Sept. 26, 2005 Loeb Partners Corporation
By: /s/ Gideon J. King
Executive Vice President
Sept. 26, 2005 Loeb Arbitrage Fund
By: Loeb Arbitrage Management, Inc., G.P.
By: /s/ Gideon J. King
President
Sept. 26, 2005 Loeb Offshore Fund Ltd.
By: /s/ Gideon J. King
Director
Sept. 26, 2005 Loeb Marathon Fund LP
By: Loeb Arbitrage Management, Inc., G.P.
By: /s/ Gideon J. King
President
Sept. 26, 2005 Loeb Marathon Offshore Fund
By: /s/ Gideon J. King
Director