SYCACUSE, N.Y. — Penn Traffic Co. here said yesterday it has entered into a definitive agreement to sell its wholesale business operations to C&S Wholesale Grocers, Keene, N.H., for approximately $43 million — a transaction Penn Traffic said will enable it to focus on retail stores and customers and to dramatically improve its capital structure.
The chain’s wholesale operation supplies more than 120 independently operated Bi-Lo, Big M and Riverside Market stores and other independent accounts in New York and Pennsylvania, accounting for an estimated $210 million, or about 20% of total revenues in fiscal 2008. The all-cash transaction, which includes the sale of approximately $13 million in wholesale-related accounts receivable to C&S, is expected to close by the end of the year.
Penn Traffic said it expects to use proceeds from the sale and the previously announced sale of two stores to pay down 62% of the chain’s outstanding debt. Penn Traffic said it will continue to handle all transportation, warehousing and distribution to its former wholesale accounts under a third-party logistics contract with C&S.
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