Thread: A&P Supermarket Chain Expected File Bankruptcy, Harbinge

A&P Supermarket Chain Expected To File For Bankruptcy, Another Harbinger Wipe Out?

Submitted by Tyler Durden on 12/10/2010 10:07 -0500
Debtwire

Stunning that anyone in this environment can file for Chapter 11. But that is precisely what is happening: supermarket chain A&P, with law firm Kirkland and Ellis and financial advisor Moelis in tow, is about to file for bankruptcy, Bloomberg reports. It is ironic that instead of passing through costs supermarkets are instead opting out to default. Nonetheless, this is likely telling on the status of food margins at major supermarkets.

Some more from DebtWire http://www.debtwire.com/ as of November 10:

Great Atlantic and Pacific is working with restructuring advisor Moelis as the grocer works to ramp up liquidity ahead of 2011 maturities, according to two sources familiar with the situation and four advisory sources not involved. The company heard pitches from potential candidates through last week, said a trader and a proprietary trading desk analyst.

A&P needs to refinance roughly USD 391m of notes that mature in 2011 and 2012, including USD 159m of 5.125% convertible notes due 2011. As part of its turnaround strategy, the chain has been downsizing its footprint while squeezing out cash flow through sale leaseback transactions and asset sales.

A&P’s USD 260m 11.375% second lien senior secured notes due 2015 have been inching higher, bolstered by the emergence of substantial buyers, said a second and a third trader. Speculation is that Yucaipa, one of the company’s largest shareholders, has been gobbling up the paper, said two bondholders and two sellside analysts. However, Harbinger Capital Management is also rumored to be taking a position, said the prop desk analyst and a fourth trader.

Great, another Harbinger wipe out.

http://www.zerohedge.com/article/ap-sup ... bankruptcy

Wow... Is this the same A&P supermarket chain that I worked in as a teenager in high school? That really takes me back.... uhhh... let's see... a few (term used very liberally ) years... Am I that old?

Fond memories of the A&P when I was a kid. At least one check out lane had a coffee grinder so you could buy freshly ground. The aroma was so pleasing.

Grocer A&P files for bankruptcy reorganization, will stay open


Updated 2h 52m ago
By Sarah Skidmore, AP Food Industry Writer

PORTLAND, Oregon — The Great Atlantic & Pacific Tea Co. (GAP), once the nation's largest grocer, filed for bankruptcy protection late Sunday after years of struggling with enormous debt and rising competition from low-priced peers.

The 151-year-old company, based in Montvale, N.J., operates 395 supermarkets in the northeastern United States under the A&P, Waldbaum's, The Food Emporium, Super Fresh, Pathmark and Food Basics banners. It said all its stores, which employ 41,000 people, will remain open. Loyalty programs and other promotions will continue.

The filing was widely anticipated. The company — best known to shoppers as A&P — has been bleeding red ink for some time. According to the filing submitted in U.S. Bankruptcy Court in White Plains, N.Y., the company listed debts of more than $3.2 billion and assets of about $2.5 billion.


WHERE THE STORES ARE: What A&P owns.

A&P, like most grocers, is struggling with the weak economy, reduced consumer spending and intense competition. The company said aggressive competition from nontraditional food retailers like warehouse clubs, discount chains such as Wal-Mart Stores, and dollar stores have compounded the problem.

The company reported revenue of $9.5 billion in 2008, which fell to $8.8 billion in 2009. And while the 2010 fiscal year is still underway, in its most recent quarter A&P said its net loss had doubled as revenue continued to sink.

It is also struggling with pension costs, lease costs for stores it has closed, and a contract with C&S Wholesale Grocers, which provides the majority of its inventory, which it has been unable to negotiate down to lower costs.

A&P also has one of the most heavily unionized work forces in the business, with 95% of its workers covered under collective bargaining agreements. It said in its filing it would seek to work with the unions to lower those costs.

According to the filing, A&P has secured $800 million in debtor-in-possession financing through J.P. Morgan Chase and will continue to focus on its turnaround plan while under bankruptcy protection. The company has brought in new management, sold 32 underperforming stores since this summer and drastically cut costs. The grocer said it could not complete this process without the protection.

Among the largest unsecured creditors listed in A&P's filing are Wilmington Trust Co., the agent for several classes of bondholders owed $632.8 million. Trade creditors include prescription drug supplier McKesson, soda bottler Coca-Cola Enterprises and Pepsico's Frito-Lay.

Wilmington Trust also holds $260 million in secured debt. Bank of America, at $133.8 million, is the other listed secured creditor.

A&P's bankruptcy, unlike some other prominent filings in recent years, isn't prenegotiated, which means it will have to put together a reorganization plan with the court that creditors would have to approve.

A&P is one of the oldest supermarket operators in the country. Its first store was in New York City and sold tea, coffee and spices. It expanded across the nation and by the 1930s was the USA's largest grocer.

Germany's Tengelmann Group is A&P's largest shareholder, with about 42% of its stock. Activist investor Ron Burkle of the Yucaipa Cos. investment firm is also a large holder, including a substantial portion of A&P's preferred stock.

http://www.usatoday.com/money/industrie ... ptcy_N.htm

Analysts: A&P Bankruptcy May Prompt Ahold Bid for Pathmark

Monday, 13 Dec 2010 07:28 AM

Great Atlantic & Pacific Tea Co.’s filing for bankruptcy protection may prompt Dutch competitor Royal Ahold NV to bid for the U.S. retailer’s Pathmark stores to add to grocery operations in the country, analysts said.

A&P, which operates 400 supermarkets under the Waldbaum’s, Food Emporium and Pathmark brands, filed for Chapter 11 protection from creditors on Dec. 12. Amsterdam-based Ahold owns the Stop & Shop grocery chain and acquired a 25-outlet retailer in Richmond, Virginia, a year ago. The Dutch company had 2.4 billion euros ($3.2 billion) in cash at the end of September.

“For Stop & Shop, the good news is a further weakening of its largest competitor and the possibility to buy some pockets of stores,â€