A&P Expects Pathmark Merger to Close in December

MONTVALE, N.J. -- The Great Atlantic & Pacific Tea Co. said yesterday that it now expects its acquisition of fellow New Jersey-based grocer Pathmark to close by the end of December, citing certain pending financial arrangements.

In an update on expected sources of financing for the transaction, A&P revealed that it and Pathmark have circulated to their stockholders a joint proxy statement prospectus dated Oct. 9 relating to their respective special stockholder meetings slated for Nov. 8. As A&P has already disclosed, it has a commitment from a group of lenders to provide a $615 million secured revolving credit facility and a $780 million bridge credit facility.

However, to minimize the amount of indebtedness at closing, reduce A&P's post-merger interest expense, and permit the company to consummate the merger as soon as possible, A&P plans to sell all of its 11.7 million shares of Canadian grocer Metro, Inc. before the transaction closes.

If the Metro shares are sold before Nov. 30, A&P expects to use the proceeds, together with borrowings under a reduced bridge facility and part of its increased $675 million ABL facility, to finance the merger. Based on the closing price of the Metro shares on the Toronto Stock Exchange on Nov. 2, the value of the Metro shares came to about $435 million.

A&P has entered into a commitment with TD Securities, Inc. in which TD has agreed to offer to purchase by Nov. 28 all of the Metro shares, at a price to be determined based on the market price for the Metro shares on the Toronto Stock Exchange on the trade date.

If A&P can't sell the shares, it plans to finance the merger using the committed financing described above, including borrowing under the bridge facility, or an offering of senior secured notes instead.

A&P operates 337 stores in eight states and the District of Columbia under the A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Sav-A-Center, and Food Basics banners. Pathmark is a regional supermarket chain operating 140 supermarkets in the New York, New Jersey and Philadelphia metropolitan areas.
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