Gro­cery chain Great At­lantic & Pa­cific Tea Co files for bank­ruptcy

The Pak Banker - - International3 -

NEW YORK: Gro­cery store chain Great At­lantic & Pa­cific Tea Co (GAP.N) filed for bank­ruptcy on Sun­day, drained of cash by tough com­pe­ti­tion and a slug­gish eco­nomic re­cov­ery.

Once the largest U.S. gro­cer, the owner of about 400 stores un­der brands such as A&P, Wald­baum's and Su­per Fresh filed for Chap­ter 11 bank­ruptcy in New York with more than $1 bil­lion in as­sets and more than $1 bil­lion in debt, ac­cord­ing to court doc­u­ments.

As of Septem­ber 11, A&P had to­tal debt of more than $3.2 bil­lion, but it is un­clear how much the com­pany is cur­rently car­ry­ing.

JP Mor­gan Chase & Co (JPM.N) will pro­vide $800 mil­lion in debtor-in-pos­ses­sion fi­nanc­ing, the com­pany said. The U.S. Bank­ruptcy Court for the South­ern District of New York will hold a hear­ing on Mon­day to ap­prove a por­tion of the fa­cil­ity.

The Mont­vale, New Jersey­based com­pany said its stores will re­main fully stocked and open with no in­ter­rup­tion of busi­ness. It has strug­gled since it acquired Path­mark Stores in 2007 with a $1.4 bil­lion fi­nanc­ing pack­age.

A&P had nearly $9 bil­lion in sales in its fis­cal year to Fe­bru­ary 2010, but it has been bleed­ing cash at a rate of nearly $5 mil­lion a week.

The com­pany re­ported hav­ing less than $100 mil­lion in cash and short-term in­vest­ments on hand in Septem­ber and it faces debt ma­tu­ri­ties in June.

Its biggest stock­hold­ers are ac­tivist in­vestor Ron Burkle and the Ger­man re­tail group Ten­gel­mann. A&P said in a state­ment that its ma­jor share­hold­ers sup­port the ac­tion.

Burkle's Yu­caipa in­vest­ment firm has built up a large po­si­tion in the com­pany's debt re­cently, which could put it in a stronger po­si­tion to con­trol the bank­ruptcy, ac­cord­ing to peo­ple fa­mil­iar with the firm's ac­tiv­i­ties.

A&P has been chal­lenged by the eco­nomic down­turn and com­peti­tors in­clud­ing ware­house clubs and dis­count re­tail­ers, Fred­eric Brace, the com­pany's chief re­struc­tur­ing of­fi­cer, said in court doc­u­ments. -Ap

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