NORFOLK, JAN. 7 -- Board members and top managers at Farm Fresh Inc. are trying to arrange a leveraged buyout by employees, The Virginian-Pilot and The Ledger-Star reported today.

The group is waiting for loan commitments before making a formal offer to the board or stockholders, the newspapers quoted anonymous sources as saying.

The paper said Farm Fresh executives see a leveraged buyout as the best way to remove distractions caused by the grocery chain's role in the past six months as a potential takeover target.

"All 10,000 Farm Fresh employees would be involved," a company source told the paper. "It would be a combination ESOP {employee stock ownership plan}-management deal. This is the only thing that makes sense for the company."

Michael E. Julian, executive vice president and chief operating officer of Farm Fresh, confirmed that such a plan is under consideration but declined to offer details or to discuss the status of the plan.

Discussion of the buyout so far has included a handful of top managers and board members, not middle management, the newspapers said.

Takeover rumblings surfaced last summer. First, Farm Fresh reported it had received buyout inquiries from unidentified investors. Then, the Grass family of Pennsylvania reported it had bought 7 percent of Farm Fresh's shares and also was interested in a buyout.

Further unrest was caused by the stock market collapse, which sent Farm Fresh shares plunging from about $18 to less than $10.

Industry analysts said an employee buyout might help Farm Fresh gain renewed direction and purpose.

"They've got to start minding the store," said Jeffrey Metzger, editor of the trade publication Food World. "This chaos has been tremendously destructive. They can't continue with this melodrama indefinitely."