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PENN TRAFFIC OUT OF BANKRUPTCY

SYRACUSE, N.Y. -- Penn Traffic here said last week it emerged from almost 23 months operating under Chapter 11 bankruptcy protection when its plan of reorganization took effect on April 13."Penn Traffic is beginning life as a new company with a solid capital structure, greatly reduced debt, disciplined and improved operations, and a strengthened management team," said Robert Chapman, president and

SYRACUSE, N.Y. -- Penn Traffic here said last week it emerged from almost 23 months operating under Chapter 11 bankruptcy protection when its plan of reorganization took effect on April 13.

"Penn Traffic is beginning life as a new company with a solid capital structure, greatly reduced debt, disciplined and improved operations, and a strengthened management team," said Robert Chapman, president and chief executive officer. "Penn Traffic today is a leaner, stronger competitor with bright prospects. We are excited to redirect our attention from the turnaround toward growth and profitability."

The chain's bankruptcy filing in May 2003 was its second since 1999.

Penn Traffic emerged from Chapter 11 with 109 supermarkets in Pennsylvania, upstate New York, Vermont and New Hampshire; a wholesale food distribution business that serves 79 licensed franchises and 40 independent operators; and Penny Curtiss Bakery. When it filed, it was operating 212 supermarkets and serving 80 franchisees and 62 independent wholesale customers, and generating sales of approximately $2.3 billion.

The company has not issued quarterly financial results since the third quarter of 2003. However, for the fiscal year ended Jan. 29, industry estimates put overall sales on an annualized basis at around $1.4 billion.

Under the reorganization plan, which was approved by the U.S. Bankruptcy Court on March 17, Penn Traffic reduced its debt load to approximately $65 million, compared with more than $530 million at the time of its filing.

Penn Traffic said it has closed on two exit financing facilities consisting of a term and revolving facility of up to $136 million principal amount and a supplemental real-estate facility of up to $28 million, as well as a sale-leaseback transaction under which it sold its five owned distribution centers in New York and Pennsylvania for $37 million to Equity Industrial Partners Corp., which will lease the facilities back to Penn Traffic for an initial term of 15 years, with options to renew.

The company said it has drawn approximately $33 million on the exit financing facility, with plans to use those funds, plus proceeds from the sale-leaseback, to fund cash distributions required under the reorganization plan and ongoing operating needs.

According to the company, its post-emergence debt of approximately $65 million consists of the initial $33 million draw and approximately $32 million of capital leases, mortgages and other obligations.

Its pre-petition secured debt totaled approximately $233 million, including $82.1 million of capital leases and other debt. Pre-petition unsecured debt totaled approximately $300 million.

Penn Traffic said it intends to repay approximately $30 million to post-petition secured lenders and issue new Penn Traffic common stock to holders of allowed unsecured claims. In addition, its existing stock will be canceled, with up to 10% of the newly issued shares reserved for management incentive stock grants.