WAYNE, N.J. -- Grand Union Co. here presented a restructuring proposal to its major creditors last week as it continues to seek a way out of its capital crunch.
default against the chain.
Grand Union, which operates 241 stores in six Northeastern states, has been attempting to develop a debt restructuring plan since late last year, when it disclosed that cash from operations after committed capital expenditures would not be sufficient to meet cash interest payments due Jan. 15 on its senior and senior subordinated bonds.
As anticipated, the company did not make those interest payments. The indentures under which the obligations were issued provide for a 30-day grace period, after which bond holders can file a default.
"Clearly, the 30-day period is significant, and one would think Grand Union would like its proposal to be in place before that," said Ken Bann, a high-yield analyst with Lehman Bros., New York.
Gary Hirsch, chairman of Grand Union and of Miller Tabak & Hirsch, the New York-based investment company that is the chain's major shareholder, declined to discuss the 30-day grace period or the proposed restructuring plan with SN last week.
However, he said the proposal provides for full and prompt payments to all Grand Union's vendors and emphasized that those payments are being made during negotiations.