A&P emerges from bankruptcy as private company, effective March 13

By Jim Witters

Wilmington, Del., March 13 - The Great Atlantic & Pacific Tea Co. Inc. (A&P) emerged from Chapter 11 bankruptcy when its plan of reorganization became effective on Wednesday, according to documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

The court confirmed the plan of reorganization on Feb. 28.

Mount Kellett Capital Management LP, the Yucaipa Cos. LLC and investment funds managed by Goldman Sachs Asset Management, LP, provided $490 million in debt and equity financing to sponsor A&P's reorganization plan and complete its balance sheet restructuring.

In addition, J.P. Morgan Securities LLC and Credit Suisse Securities LLC arranged a $645 million exit financing facility.

"In just over one year, we have completed a thorough restructuring of A&P's cost structure and balance sheet to build a strong foundation for the company's future. With the full support of our financial partners, the new A&P is committed to delivering exceptional value and an enhanced in-store experience to all of our customers across our more than 300 neighborhood food and drug stores," said Sam Martin, A&P's president and CEO.

As part of the restructuring process, A&P assembled a new management team, adjusted its store footprint around its core markets and negotiated a new supply and logistics agreement with its principal supplier, C&S Wholesale Grocers, Inc., according to a company press release.

The company also worked with the unions representing A&P's associates to modify their collective bargaining agreements, the release stated.

A&P also refurbished stores, eliminated closed store leases and opened a new Superfresh store in Philadelphia's Northern Liberties neighborhood, the release said.

Creditor treatment

Treatment of creditors under the confirmed plan includes 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 plus interest or receive replacement second-lien notes equal to the value of their claims;

• 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 $40 million 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, they 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, they 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 Section 510(b) claims will receive no distribution; and

• Interests in A&P will be canceled.

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.