Bankruptcy Court OKs $100M DIP Financing for A&P
The U.S. Bankruptcy Court for the Southern District of New York has approved The Great Atlantic & Pacific Tea Co.'s (A&P) first-day motions, enabling the grocer to run its business and serve customers during the Chapter 11 process.
Among the motions approved, the court has granted A&P immediate access to $50 million of the $100 million debtor-in-possession (DIP) financing provided by New York-based Fortress Investment Group. The financing will allow the company to keep operating its stores and paying its suppliers, vendors and employees.
As PG reported previously, Montvale, N.J.-based A&P is set to sell about 120 stores, and will continue to unload assets throughout the Chapter 11 process. Ahold USA's Stop & Shop banner has already revealed that it's purchasing 25 of the chain’s New York metro-area locations, while Albertsons' Acme Markets plans to acquire 76 in six states. A&P has also decided to shutter 25 underperforming stores in the near future. All asset and store sales will be conducted through a court-supervised sale process, subject to court approval and certain other conditions, and could include a credit bid for certain assets to be purchased by A&P's current investors, which include Ron Burkle's Los Angeles-based Yucaipa Cos. Yucaipa helped A&P restructure its business the last time it emerged from Chapter 11 bankruptcy, in March 2012.
Hoping to Save Jobs, Shareholder Value
Except for the 25 stores slated to close, A&P intends to maintain fully stocked locations, with all existing customer promotional and loyalty programs remaining in place.
"We are confident that pursuing a sale process implemented through Chapter 11 will enable us to preserve as many jobs as possible and ensure that we achieve the best possible outcome for all stakeholders," said Paul Hertz, president and CEO of A&P, which operates in the Northeast under the A&P, Best Cellars, Food Basics, The Food Emporium, Pathmark, Superfresh and Waldbaum's banners.
Meanwhile, the Washington, D.C.-based United Food & Commercial Workers (UFCW) International Union, to which 30,000 of the grocer's employees belong, said that it "fully expect[s] A&P to stay in business during this bankruptcy process and honor its responsibilities to its employees, our members, and their families. The UFCW and UFCW Local Unions will work hard to ensure that the process for selling stores protects our members’ jobs, working conditions, and benefits. We will also hold A&P to its commitments to involve UFCW in the sales process, protect union contracts and these good jobs."
The company's legal representative in its Chapter 11 cases is Weil, Gotshal & Manges LLP, while its financial advisers are Evercore, FTI Consulting and Hilco Global.