A&P amends credit facility covenants

New York, March 7 - The Great Atlantic & Pacific Tea Co. amended its credit facility to ease covenants.

Under terms of the amendment, A&P is required to maintain a fixed charge coverage ratio of 1.15:1 through the end of the first fiscal quarter of the fiscal year ending Feb. 22, 2005 and 1.40:1 after that. However if the company does not raise at least $140 million from asset sales by the end of the second fiscal quarter of the year ending Feb. 22, 2004 then the required ratio will be 1.25:1 for the second fiscal quarter of the year ending Feb. 22, 2004 through the end of the first fiscal quarter of the fiscal year ending Feb. 22, 2005.

Senior secured debt to consolidated EBITDA must be 1.80:1 or less for any four-quarter ending on dates through the end of the first quarter of the fiscal year ending Feb. 22, 2005.

Total funded debt to consolidated EBITDA must be 3.50:1 or less for any four-quarter ending on dates through the end of the second quarter of the fiscal year ending Feb. 22, 2005.

Capital expenditures are limited to 25% of the proceeds of asset sales in any year plus $245 million for the fiscal year ending Feb. 22, 2003 and $135 million for the fiscal year ending Feb. 22, 2004 and fiscal years after that.

Minimum consolidated EBITDA is required to be at least $165 million for the four quarters ending with the first quarter of the fiscal year ending Feb. 22, 2004 and $150 million for the four quarters ending with the second quarter of the fiscal year ending Feb. 22, 2004 and onwards. However if A&P does not raise at least $140 million from asset sales by the end of the second fiscal quarter of the year ending Feb. 22, 2004 then the requirement is $175 million for the four quarters ending with the third quarter of the fiscal year ending Feb. 22, 2004 and $180 million for the four quarters ending with the fourth quarter of the fiscal year ending Feb. 22, 2004.

Interest rates on the facility are also changed. A&P now pays Libor plus 250 basis points if the lowest rating is Ba1 from Moody's Investors Service or BB+ from Standard & Poor's, Libor plus 275 basis points if the lowest rating is Ba2 or BB, Libor plus 300 basis points if the lowest rating is Ba3 or BB-, Libor plus 325 basis points if the lowest rating is B1 or B+ and Libor plus 350 basis points if the lowest rating is B2 or B.

The Montvale, N.J. supermarket operator also paid a 25 basis points amendment fee to the lenders.

The credit facility is via JPMorgan Chase Bank as administrative agent.

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