Penn Traffic Emerges from Chapter 11

SYRACUSE, N.Y -- The Penn Traffic Co. said yesterday that its reorganization plan is now effective and that the company has formally emerged from Chapter 11 under the Bankruptcy Code.

As previously announced, the U.S. Bankruptcy Court for the Southern District of New York confirmed the company's plan March 17.

Penn Traffic said that in connection with its emergence from Chapter 11, it closed on two exit-financing facilities consisting of a term and revolving facility of up to $136 million principal amount and a supplemental real estate facility of up to $28 million principal amount, as well as a sale-leaseback transaction in which Penn Traffic sold its five owned distribution centers in New York and Pennsylvania to Equity Industrial Partners Corp. for $37 million. Equity Industrial will lease the distribution centers back to Penn Traffic for an initial term of 15 years, with four consecutive five-year options to renew the lease.

The exit financing and proceeds from the sale-leaseback transaction will fund cash distributions required under the plan, as well as Penn Traffic’s ongoing operating needs.

Penn Traffic's emergence debt totals approximately $65 million, including the initial $33 million draw and approximately $32 million of capital leases, mortgages, and other debt.

"We are extremely pleased to exit Chapter 11 today," said Robert Chapman, president and c.e.o. "Penn Traffic is beginning life as a new company with a solid capital structure, greatly reduced debt, disciplined and improved operations, and a strengthened management team. Penn Traffic today is a leaner, strong competitor with bright prospects. We are excited to now redirect our attention from the turnaround toward growth and profitability."
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