Dec 29, 2008 2:14 PM

The Penn Traffic Company amended its existing credit agreements and closed the previously announced sale of its wholesale business segment and related accounts receivable to C&S Wholesale Grocers Inc.

Penn Traffic will be completing the paydown of $32 million, or 62 percent of its outstanding funded debt, by its fiscal year-end, using proceeds from the wholesale divestiture as well as from two recently announced store sales. Specifically, the company will pay down its $17 million revolving line of credit to zero and approximately $15 million of the company’s $25 million supplemental real estate facility. The company’s $6 million term loan will continue to remain outstanding. The company believes these actions will significantly improve availability in excess of outstanding letters of credit.

The company’s lenders have agreed to amendments and waivers to the existing credit agreements and provided the necessary consent to allow Penn Traffic to complete the all-cash transaction and debt paydown. Penn Traffic has also secured a new extension, through April 2010, of its existing working capital revolver and supplemental real estate facility, which maintain the existing pricing structure.