A&P details $615 million ABL revolver, $780 million bonds for Pathmark purchase

By Sara Rosenberg

New York, March 6 - The Great Atlantic & Pacific Tea Co., Inc. (A&P) came out with more specifics on the financing for its purchase of Pathmark Stores Inc., including that the five-year ABL revolving credit facility will be sized at $615 million and the high-yield senior secured bond offering will be sized at $780 million, according to an 8-K filed with the Securities and Exchange Commission Tuesday.

Previously, a company spokesman had told Prospect News that the ABL would be around $600 million and the bonds would be around $800 million.

Bank of America is the lead arranger and bookrunner on the revolver, and Bank of America and Lehman Brothers are the lead banks on the bond offering.

The revolver will consist of a $575 million tranche expected at Libor plus 175 basis points and an up to $40 million last out tranche expected at Libor plus 300 bps.

There is a $100 million accordion feature.

Under the transaction agreement, A&P is buying Pathmark for $1.3 billion in cash, stock and debt assumption or retirement.

All of Pathmark's bonds will be refinanced through a tender and A&P will assume about $170 million of Pathmark capital leases.

Pathmark shareholders will receive $9.00 in cash and 0.12963 shares of A&P stock for each Pathmark share. A portion of the cash merger consideration will be provided by the sale by A&P of a portion of its shares in Metro, Inc. or, if needed, A&P capital stock, totaling $190 million of net cash proceeds.

The transaction is expected to be completed during the second half of A&P's fiscal 2007 year, subject to completion of shareholder and regulatory approvals, as well as other customary closing conditions.

A&P is a Montvale, N.J.-based supermarket chain. Pathmark is a Carteret, N.J.-based supermarket chain.

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