Retail News Breaks Archives
Troubled A&P files for Chapter 11 protection
December 13th, 2010
MONTVALE, N.J. – Troubled northeastern supermarket operator A&P has filed for protection under Chapter 11 of the federal bankruptcy code.
All of the company’s 395 stores in New York, New Jersey and Connecticut remain open and are fully stocked, according to the company.
"We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring," said president and chief executive officer Sam Martin. "While we have made substantial progress on the operational and merchandising aspects of our turnaround plan, we concluded that we could not complete our turnaround without availing ourselves of Chapter 11. It will allow us to restructure our debt, reduce our structural costs, and address our legacy issues."
The troubled retailer has entered into an $800 million debtor-in-possession (DIP) facility with JPMorgan Chase & Co. The company’s ability to borrow under the facility is subject to bankruptcy court approval, and a hearing to approve a portion of the facility has been scheduld for December 13.
Once approved, the DIP facility will be available to fund A&P’s operations, pay suppliers and provide the necessary capital to continue improvement and renovation of select stores. In addition, management expects to receive full authority to pay employee wages and benefits without interruption.
Chief administrative officer Jake Brace will lead the restructuring effort and has been given the additional title of chief restructuring officer.
When A&P released its second-quarter results, which included a 6.6% decline in comparable-store sales and a net loss of $153.7 million, or $2.95 per share, executives cautioned that negotiations for new financing would require several more weeks. In its 10-Q filing, management warned that if the refinancing did not go through and liquidity did not improve, "there is substantial doubt about our company’s ability to continue as a going concern."
"With the protections afforded by the bankruptcy code and the backing of a new, pre-eminent lender, we can make strategic decisions that will benefit the company over the long term, enabling A&P to emerge with a new capital structure and in a much improved position to exploit its fundamental strengths," Martin added.