A&P files voluntary petition
for Chapter 11 protection
Dec 13, 2010 10:33 AM
The Great Atlantic & Pacific Tea Company Inc (A&P) (NYSE: GAP) has filed a voluntary petition under Chapter 11 of the US Bankruptcy Code with the US Bankruptcy Court for the Southern District of New York. The Chapter 11 process will facilitate A&P’s financial and operational restructuring, which is intended to restore the company to long-term financial health.
A&P continues to conduct its business and serve customers at its 395 stores. These stores are fully stocked with products, and all existing customer promotional and customer loyalty programs will stay in place.
The supermarket chain will have access to $800 million in debtor-in-possession (DIP) financing, which will enable it to continue paying local suppliers, vendors, employees, and others in the normal course of business.
Sam Martin, A&P president and chief executive officer, said, “We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring. While we have made substantial progress on the operational and merchandising aspects of our turnaround plan, we concluded that we could not complete our turnaround without availing ourselves of Chapter 11. It will allow us to restructure our debt, reduce our structural costs, and address our legacy issues.
“With the protections afforded by the Bankruptcy Code and the backing of a new, pre-eminent lender, we can make strategic decisions that will benefit the company over the long term, enabling A&P to emerge with a new capital structure and in a much improved position to exploit its fundamental strengths,” he said.
A&P intends to continue and accelerate most of the elements of the turnaround plan announced in October, including:
•A completely new management team.
•Reducing structural and operating costs.
•Improving the A&P value proposition for customers.
•Enhancing the customer experience in stores.
The company announced that Frederic F “Jake” Brace, who was named chief administrative officer in August, will lead the restructuring effort. He will take the additional title of chief restructuring officer to reflect his expanded role.
A&P has entered into an $800 million DIP facility with JPMorgan Chase & Co. Its ability to obtain borrowings under such facility is subject to satisfaction of customary conditions and receipt of court approval. The DIP facility is being fully underwritten by JPMorgan Chase.
The company expects to receive full authority to pay employee wages and benefits on an uninterrupted basis.
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