GRAND UNION BANKRUPTCY PLAN GETS COURT'S OK

ELLIOT ZWIEBACH

WAYNE, N.J. -- Grand Union Co. here said last week the U.S. Bankruptcy Court in Wilmington, Del., has confirmed its plan of reorganization.

The chain also selected a new board, which will hold its first meeting on June 14, Roger E. Stangeland, incoming chairman, told SN. The reorganization plan, which is expected to take effect next week, stems from a filing in late January for bankruptcy protection under Chapter 11. Stangeland said the new board expects to meet frequently -- probably on a monthly basis -- for several months "because there's a back-log of work that needs to be done, and we can't catch up quickly."

Besides Stangeland, the other members of the new Grand Union board include the following:

Joseph J. McCaig, who will continue as president and chief executive

ecutive officer of Grand Union -- a holdover from the pre-Chapter 11 board.

William A. Louttit, who will continue as the chain's executive vice president and chief operating officer -- also a holdover form the previous board.

Daniel E. Josephs, former president and chief operating officer of Dominick's Finer Foods, Northlake, Ill.

William G. Kagler, chairman of Skyline Chili, Cincinnati, and former president of Kroger Co., Cincinnati.

Douglas T. McClure Jr., managing director of New Street Capital Corp., New York.

David Y. Ying, managing director of Donaldson Lufkin & Jenrette Securities Corp., New York.

Stangeland said next week's board meeting will be taken up with routine organizational details, including the reappointment of top management, "but it will also be the first opportunity for the new board members and top management to get acquainted.

"However, we recognize that time is precious, and there will be a sense of urgency to look at what needs to be done in a businesslike, highly productive manner."

As reported, Stangeland will succeed Gary D. Hirsch as board chairman. Hirsch will remain chairman of Penn Traffic Co., Syracuse, N.Y.

Grand Union operates 231 stores in six Northeastern states. It filed a pre-negotiated plan of financial reorganization under Chapter 11 on Jan. 25.

Under the reorganization plan:

Grand Union will issue 10 million shares of new stock in the company to existing holders of senior subordinated notes, which will eliminate that group's claims of $603 million. The company estimates that the shares represent a 28.2% recovery on those claims, indicating a stock value of about $17 per share.

Senior note holders, who comprise the other major creditor group with claims of $570 million, will receive a new issue of 12% senior coupon bonds for the full amount of the claims.

Zero coupon bondholders in Grand Union Capital Corp., the chain's parent company, will receive two series of warrants -- valued at $30 and $42, respectively -- that can be exercised to purchase shares of stock over the next five years.

Hirsch will step down as Grand Union's chairman and the new board will be seated.

The reorganization will enable Grand Union to lower its $2.1-billion debt by $600 million, which will provide more cash flow for store investment, analysts said.