Campeau Seeks to Spin Off Its Ralphs Chain : Retailing: The troubled parent firm would turn the supermarkets into a publicly held company as part of its reorganization plan.

Ralphs Grocery Co. would be jettisoned from the ailing Campeau Corp. real estate and retailing empire and set up as an independent, publicly held company under a reorganization plan filed Monday in U.S. Bankruptcy Court.

The surprising proposal for Ralphs would put 60.3% of the supermarket company’s stock in the hands of Edward J. DeBartolo Corp., a major shopping center developer based in Youngstown, Ohio.

It also would mark the first time that Ralphs, Southern California’s No. 3 supermarket chain, has operated independently since its founding family sold it in 1968.

The Ralphs proposal was part of a complicated, tentative package of financial plans submitted by Federated Stores Inc., the parent of Campeau’s U.S. retailing organization, and its Federated Department Stores and Allied Stores divisions. The overall package is intended to bring the organization’s nine department store chains, including Bloomingdale’s of New York, out of bankruptcy in the biggest retailing restructuring in U.S. history.

Ralphs is Campeau’s lone U.S. retailing unit operating outside Chapter 11 bankruptcy, but there have been concerns that the parent organization’s problems would spill over into the Compton-based supermarket chain. Nearly 84% of Ralphs’ stock is owned by Federated Department Stores, and the rest is held by Allied.

Byron Allumbaugh, chairman of Ralphs, called the reorganization proposal “great news.”

“We will continue to operate as we have, with the cloud that’s been over us removed,” Allumbaugh said. “That’s a very big step forward.”

As of last fall, Ralphs’ bonds were depressed, amid worries that the chain might be forced to cover the unpaid taxes of its bankrupt sister companies. Ralphs issued $400 million in junk bonds in 1988 to finance the company after it was turned into a stand-alone subsidiary of Campeau.

DeBartolo emerged as a factor after Campeau defaulted last year on a $480-million loan from the Ohio developer that was secured by Federated’s 84% stake in Ralphs. But Ralphs officials previously dismissed the chance of a takeover by DeBartolo, citing tax consequences for the developer.

On Monday, however, Allumbaugh said there are yet-to-be-announced Internal Revenue Service “interpretations and agreements” that would “make the tax issues go away.” He declined to elaborate on that point, other than to say negotiations are continuing with the IRS and that the reorganization would not be completed until those talks are wrapped up.

The overhaul, Allumbaugh said, would free Ralphs--Campeau’s only retailer in California--to push ahead on a rapid expansion. The grocer, which has 151 stores in Southern California, has already announced plans to add 30 more by the end of 1992.

Allumbaugh said DeBartolo would retain Ralphs’ current management but would put representatives on the company’s board. DeBartolo officials could not be reached.

Industry observers cautioned that the reorganization plan could be revised substantially or completely rewritten before going into effect. Even if negotiations with the Federated and Allied creditors’ committees go smoothly--which is considered unlikely--the reorganization plan is not expected to receive bankruptcy court approval until early 1992.

One analyst, who asked not to be identified, called the Ralphs proposal “pretty unbelievable.”

The analyst expressed surprise that DeBartolo would gain as much as 60.3% of Ralphs stock. Another concern raised was that Ralphs’ bondholders might be able to demand that the company buy back their bonds because of the change in the company’s ownership.

After DeBartolo, the second-biggest Ralphs shareholder under the plan would be a newly merged Federated-Allied organization, with a 16.2% stake. The other holders would be Campeau Corp., with a 14.8% stake, and Bank of Montreal and Banque Paribas, which together would have 8.6%.

Much of the stock distributed to those current Federated and Allied creditors would later be sold off in a public offering.

Aside from dealing with Ralphs, the reorganization plan would pay Federated and Allied department store merchandise suppliers $850 million in cash and give securities to other creditors.

Federated Department Stores and Allied entered Chapter 11 in January, 1990, after collapsing under $7.7 billion in debt. Much of that debt was in junk bonds that Campeau issued to finance its Allied and Federated takeovers.