A&P tweaks unsecured creditor cash pool in amended plan, disclosure

By Caroline Salls

Pittsburgh, Nov. 30 - The Great Atlantic & Pacific Tea Co., Inc. filed an amended plan of reorganization and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the Southern District of New York to revise the details of an unsecured creditor cash pool.

Under the original plan, the proceeds of a commitment from investors the Yucaipa Cos. LLC, Mount Kellett Capital Management LP and investment funds managed by Goldman Sachs Asset Management, LP were expected to provide a $40 million cash pool for distributions to general unsecured creditors.

However, under the amended plan, the unsecured cash pool will be $40 million, minus the amount to be distributed under a substantive consolidation settlement cash pool.

As previously reported, A&P has entered into an agreement to receive $490 million of debt and equity financing from private investors the Yucaipa Cos. LLC, Mount Kellett Capital Management LP and investment funds managed by Goldman Sachs Asset Management, LP.

Investment details

According to the disclosure statement, the $490 million new-money commitment will come in the form of $210 million principal amount of privately placed new second-lien notes, $210 million principal amount of privately placed new convertible third-lien notes and an $80 million new equity investment.

The $210 million principal amount of new second-lien notes will be issued with a 5% original issue discount. As a result, the total amount of those securities includes $200 million of funds from the issuance, not $210 million, the disclosure statement said.

Creditor treatment

Treatment of creditors under the amended plan will include the following:

• Administrative claims, debtor-in-possession facility claims, priority tax claims, secured tax claims and other priority claims will be paid in full in cash;

• Holders of second-lien notes claims will either be paid in full in cash, receive replacement second-lien notes or receive a combination of cash and notes;

• Other secured claims will either be reinstated or holders will be paid in full in cash or receive the collateral securing their claims;

• Holders of convertible notes claims, 9 1/8% senior notes claims, general unsecured claims and quarterly interest bond claims will share in the unsecured creditor cash pool;

• Holders of trade claims will receive a share of the unsecured creditor cash pool, and, if they enter into acceptable trade agreements, will receive a share of a trade claims cash pool;

• Holders of guaranteed landlord claims will receive a share of the unsecured creditor cash pool, and, if they vote to accept the plan, will receive a share of a substantive consolidation settlement cash pool;

• Union claims will be paid in accordance with a union settlement agreement;

• Holders of intercompany claims and intercompany interests will receive no distribution, but these claims and interests may be reinstated at the debtors' discretion;

• Holders of subordinated claims will receive no distribution; and

• Interests in A&P will be canceled.

The disclosure statement hearing is scheduled for Dec. 15.

A&P, a Montvale, N.J.-based operator of supermarkets, filed for bankruptcy on Dec. 12, 2010. Its Chapter 11 case number is 10-25459.

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