Friday, November 18, 2011

The A&P Bankruptcy Plan



According to the first draft of the Bankruptcy Plan being developed by Great Atlantic & Pacific Tea Co. (A&P), if you are a Senior Bondholder, you will be paid in full. Other classes of creditors will receive a percentage of par ($1,000). GREAT ATLANTIC & PAC TEA INC 9.12500% 12/15/2011 Senior Notes is not a mortgage bond but will be able to participate in the $40 million cash pool according to the Bloomberg News Article below.


Bloomberg


Bankrupt A&P Proposes Reorganization Based on Yucaipa Financing
November 15, 2011, 5:30 PM EST
By David McLaughlin


Nov. 15 (Bloomberg) -- Great Atlantic & Pacific Tea Co., relying on financing from an investor group that includes Ron Burkle’s Yucaipa Cos, proposed a bankruptcy plan to exit court protection.


A&P, as the supermarket company is known, won court approval yesterday of the $490 million financing commitment and filed its proposal to pay creditors and complete its restructuring with the U.S. Bankruptcy Court in White Plains, New York.


The capital provided by the investment agreement, which allows A&P to consider better offers as it works to complete its bankruptcy case, are necessary for A&P to be viable, Ray Schrock, a lawyer for the company said.


“Without this capital infusion there is no viable reorganization,” Schrock told U.S. Bankruptcy Judge Robert Drain at a court hearing. “It’s absolutely critical.”


A&P, based in Montvale, New Jersey, operates more than 300 stores under several banners, including A&P, Pathmark and Food Emporium. As of Sept. 10, it reported total assets of $2.34 billion and liabilities of $3.58 billion, according to court documents. A&P filed for bankruptcy last year.


A&P announced Nov. 3 that Yucaipa, Mount Kellett Capital Management, and investment funds managed by Goldman Sachs Asset Management had agreed to provide $490 million in debt and equity funding.


Other Offers


Drain approved the financing commitment yesterday, saying A&P was locking in financing now while keeping the ability to consider other offers that may come along. A&P will return to court for approval of the bankruptcy plan. It has said it expects to emerge from bankruptcy early next year.


“Both noteholder investors and Yucaipa are well established and well-regarded investors,” Drain said.


Under the financing plan, the investors will purchase new notes and shares and will receive all the equity in the reorganized company, according to court papers. Secured creditors will be paid in full and a $40 million cash pool will be available for general unsecured creditors, according to the court filing. The company provided percentage recoveries only for some classes of creditors. Recoveries for others were left blank.


The case is In re The Great Atlantic & Pacific Tea Co. Inc., 10-24549, U.S. Bankruptcy Court, Southern District of New York (White Plains).


--Editors: Peter Blumberg, Stephen Farr


To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net


To contact the editors responsible for this story: John Pickering at jpickering@bloomberg.net

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