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Updated Wednesday, January 9, 2013 at 10:46 PM

Starbucks’ fight for Tully’s to continue Friday in court

By Melissa Allison
Seattle Times business reporter

Starbucks said Wednesday it will support efforts to have a bankruptcy court reconsider bids to purchase Tully’s Coffee.

The company said it plans to back a filing in which Tully’s franchisee AgriNurture outlines why it believes AgriNurture and Starbucks’ bids should be accepted.

The companies hope to derail a $9.15 million bid from actor Patrick Dempsey and his investor group that Tully’s and its creditors chose last week in a private auction.

Together, Starbucks and AgriNurture have offered to buy all 47 Tully’s locations for $10.56 million. Starbucks wants 25 of those stores, which it would rebrand Starbucks.

The case is to be heard Friday in U.S. Bankruptcy Court in Seattle.

Cliff Burrows, Starbucks’ president for the Americas, said the offers from his company and AgriNurture are best for Tully’s creditors, shareholders and employees, and for Seattle

“Starbucks’ hometown has been in Seattle for more than 40 years, and we know what it takes to run a successful coffee house here,” Burrows said.

What he did not say is that Tully’s record has been quite the opposite, through many CEOs. In two decades, it turned a profit in only two fiscal years, when it sold substantial portions of its company.

In an emailed statement, Dempsey said, “We remain confident that the court will reach the right decision and find that Global Baristas LLC [his group] submitted the highest and best bid.”

Burrows said Starbucks would give qualified employees priority for jobs. He declined to comment on what would happen to employees at Tully’s Seattle headquarters.

Starbucks has not filed a response in court to Tully’s plan to accept Dempsey’s offer, but Burrows said that at the hearing the chain will support AgriNurture’s effort to have their two offers reconsidered.

“AgriNurture believes that the combined Starbucks/AgriNurture bids constitute the highest and best bid,” publicly traded AgriNurture said in its filing Wednesday. It operates six Tully’s franchise locations in the Philippines.

The filing said that during last week’s auction, Dempsey’s lower bid was chosen because of concerns about whether Green Mountain Coffee Roasters would consent to the deal. Green Mountain bought Tully’s wholesale business and the rights to its name in 2009.

“Parties may offer any number of reasons why the [Dempsey] bid should be deemed the ‘Successful Bid,’ but the only reason offered at the auction was the uncertainty surrounding Green Mountain’s consent,” the AgriNurture filing said.

In its own filing, Green Mountain — which has a business relationship with Starbucks — said it has reached agreements with Dempsey’s group and AgriNurture for new license, supply and noncompetition agreements, and does not plan to object to a sale to either party.

AgriNurture’s filing argues there is thus no reason why the Debtor should continue to reject the additional $1.35 million that will result from acceptance of the combined bids of Starbucks and AgriNurture.”

Another bidder formally objected to the Dempsey deal in a filing Wednesday.

Neon T Coffee Shops, formerly Kachi Partners of Colorado, cited the publicity surrounding Dempsey’s deal and what it considered unequal treatment of parties making partial bids, among other things.

“Neon T was and is still prepared to enter into a partial asset bid that could result in increasing value to the Estate,” the filing said.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com. Twitter @AllisonSeattle.


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