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PENN TRAFFIC SEEN EMERGING AS VIABLE OPERATOR

SYRACUSE, N.Y. -- Penn Traffic here appears poised to reorganize itself as a smaller regional retailer and wholesaler now that it has shed its Big Bear division in Ohio and West Virginia, according to industry observers.The company, which filed for Chapter 11 bankruptcy protection last May, recently unveiled plans to exit the Ohio and West Virginia markets through the sale or closure of its Big Bear

SYRACUSE, N.Y. -- Penn Traffic here appears poised to reorganize itself as a smaller regional retailer and wholesaler now that it has shed its Big Bear division in Ohio and West Virginia, according to industry observers.

The company, which filed for Chapter 11 bankruptcy protection last May, recently unveiled plans to exit the Ohio and West Virginia markets through the sale or closure of its Big Bear stores. The disposal of Big Bear, along with other previously announced store closings, will leave it with about 110 supermarkets under the Quality, Bi-Lo and P&C banners in Pennsylvania and New York, plus a regional supermarket wholesaling operation serving 75 franchised stores and 42 independents.

The company is scheduled to file a plan of reorganization by Jan. 29, although a spokesman for the company noted that Penn Traffic had the option to seek an extension.

In a filing late last month with the U.S. Bankruptcy Court, the company reported a loss of $5.74 million from sales of $101 million for the four weeks ended Nov. 29, which included results from the Big Bear stores. Most of those are slated to be closed by the end of this month.

Burt Flickinger, managing director, Strategic Resource Group, New York, said it appeared that Penn Traffic had been able to accomplish much of what it needed to in the bankruptcy process to emerge as a viable retailer/wholesaler.

"It looks like they're going to reorganize around New York and Pennsylvania, and it looks like they'll be able to make a pretty good stand," he said. "They're making money on the wholesale side of the business. Big M (a franchise division in upstate New York) is making money, Quality is making money and P&C's doing reasonably well."

He said the "only disappointing thing" about the bankruptcy was that the company was unable to obtain better terms on the leases for some of its good locations, and was forced to close those stores.

"They've lost maybe half a dozen good sites in New York state, but with the exception of that, things do look good in their biggest markets," he said, citing Buffalo, Syracuse, Albany and other New York and Pennsylvania regions.

In addition, he said, the company is getting credit from its major vendors and has assembled a solid executive team under James A. Demme, who was named chairman in September.