Update: A&P Explores Possible Sale

MONTVALE, N.J. — A&P has engaged Credit Suisse to explore strategic alternatives including a possible sale, the company told its employees this week.

According to A&P chairman Greg Mays, the parent of the A&P, Pathmark and Food Emporium chains is seeking capital for new investment.

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“The capital raise effort will include but not be limited to: (1) raising new capital from investors; (2) considering new business partner relationships; (3) potentially re-financing the company to meet our growth expectations; and (4) under the right circumstances, considering a sale of the company,” Mays said in a memorandum distributed to employees this week.

“Our goal is to ensure that the company is well-positioned for future success that will benefit A&P, our associates, partners, suppliers and customers — and we will ultimately pursue what is the best possible course for all constituents,” the memo continued. “Indeed, it is possible we will decide not to pursue any of these alternatives and will instead choose to simply capitalize our growth plan at a slower pace from internal free cash flow. While it's premature to speculate on the exact outcome of the strategic review process, we want to be clear that this financial initiative is the first step toward building a stronger future for our business.

The Wall Street Journal reported that A&P could seek $1 billion or more in a sale.

Mays said efforts to improve efficiency and reduce debt at the retailer have helped to significantly strengthen its balance sheet, but the company is still losing money. A&P last year emerged from a lengthy stay in Chapter 11 bankruptcy protection during which it slashed labor and supply costs and expenses for dark stores. It has since raised cash through store sales and sale-leasebacks, but has continued to close money-losing stores.

A&P emerged from bankruptcy last year and operates about 300 stores in the Northeast.

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