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SAFEWAY ANNOUNCES DISCUSSIONS WITH APPLETREE MARKETS

      SAFEWAY ANNOUNCES DISCUSSIONS WITH APPLETREE MARKETS
    OAKLAND, Calif., Nov. 7 /PRNewswire/ -- Safeway Inc. (NYSE: SWY) announced today that it is in discussions with AppleTree Markets Inc., the buyer of Safeway's former Houston Division, and certain of AppleTree's creditors concerning the financial condition of AppleTree. AppleTree has announced that is has defaulted on certain debt obligations and has notified some of its lessors of its intent to discontinue future lease payments.
    In connection with Safeway's asset disposition process following its 1986 LBO, Safeway assigned a significant number of leases in its disposed operations to the buyer/operators.  Safeway remains liable in the event that the assignees are unable to continue making rental payments on such leases.
    While it is not presently possible to determine the potential liability associated with the AppleTree obligations, Safeway expects that it will make an estimate of such liability and record a charge to net operating results in the fourth quarter of 1991.  Safeway does not expect that such charge will have a material effect on Safeway's consolidated cash flow or financial position.  However, the charge is expected to have a material effect on the reported net operating results for the year.  Any cash payments required by Safeway would likely be spread over several years.
    Safeway has reviewed its potential obligations with respect to other divested operations and expects that they will not be significant to Safeway's net operating results, cash flow or financial position.
    Safeway Inc. is one of the world's largest food retailers, operating more than 1,100 stores in the United States and Canada.  The company's common stock is traded on the New York Stock Exchange under the symbol SWY.
    -0-                  11/7/91
    /CONTACT:  Melissa Plaisance of Safeway Stores Inc., 510-891-3136/
    (SWY) CO:  Safeway Stores Inc. ST:  California IN:  REA SU: RM -- SF004 -- 2429 11/07/91 17:25 EST
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Publication:PR Newswire
Date:Nov 7, 1991
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