GRAND UNION TO SEEK NEW EXCHANGE LISTING

ELLIOT ZWIEBACH

WAYNE, N.J. -- Grand Union will soon be hunting for a new stock exchange for its shares.

The company here said it expects to have its stock listed on "a nationally recognized market or exchange" once its proposed financial restructuring ensures the capitalization requirements and overall valuation necessary for such a listing.

The company, which is restructuring for the second time in three years, was delisted by the Nasdaq SmallCap Market May 20 and is currently listed on the Over-the-Counter Bulletin Board.

Grand Union had been listed on the New York Stock Exchange from 1929 until 1976, when the chain went private. After emerging from its first Chapter 11 in June 1995, it was listed on the Nasdaq National Market Listing -- until last October, when it was moved to the SmallCap index.

Donald C. Vaillancourt, corporate vice president of communications and consumer affairs, told SN last week the company lost its Nasdaq listing because of its failure to meet requirements for capitalization, stock price and overall value. "But once we emerge from Chapter 11 in mid-August, Grand Union will be a much healthier company with a solid value that can meet any criteria of any major exchange," Vaillancourt said.

While he said the company "fully expects" to be trading on a major exchange, Vaillancourt declined to say to which one Grand Union will apply.

Grand Union is in the midst of a shareholder solicitation seeking approval of its restructuring plan. In a disclosure statement that was sent to shareholders, along with ballots, late last month, the company said ballots are due June 22, with a voluntary prepackaged reorganization filing in U.S. Bankruptcy Court to follow and emergence from Chapter 11 anticipated in mid-August.

According to projections in the disclosure statement, Grand Union envisions a gradual five-year turnaround. If the restructuring goes into effect, the company said that by 2003 it expects a 25% sales increase, a doubling of operating cash flow and a return to profitability.

Securities analysts contacted by SN said the company's goals are achievable, although they expressed some doubts about the level of capital spending contemplated over the next five years.

In the disclosure statement, the company said it expects sales for the year ended March 28 to drop 2.1% to $2.26 billion, compared with $2.3 billion a year ago. It said it expects sales to grow 3.4% to $2.31 billion in 1999; 3.4% to $2.4 billion in 2000; 4% to $2.5 billion in 2001; 4.4% to $2.6 billion in 2002; and 7% to $2.8 billion in 2003.

The company also said it expects to report ongoing losses until 2003, when it anticipates a profit of $12.3 million, and it anticipates operating cash flow to double from $70.6 million in the fiscal year just ended to $142.1 million in 2003. The company said its projections are based on strategic initiatives, including new marketing and merchandising activities and store upgrades.

The company said it expects to boost capital spending in 1999 by 68%, to $67 million, compared with $39.7 million spent in fiscal 1998. It said it plans to allocate $68.6 million to capital expenditures in 2000; $50.8 million in 2001; $51.4 million in 2002; and $54.2 million in 2003.

However, it may be a while before anyone, including the company, has a sense of how accurate its projections will be, one securities analyst, who asked not to be quoted by name, told SN last week.

"Anyone can claim his crystal ball is clear, but with the company operating under bankruptcy for most of the last fiscal year and the first couple of quarters of the current year, we probably won't get a good bead on the status of the top line until this fall or even later in the year," he said.

The analyst said he was also concerned about the rate of projected capital spending, which may be too low.

Bob Lupo, an analyst with BA Securities, Chicago, said he was surprised at the relatively low level of spending, although he added that the projected spending levels might be appropriate if the company plans to concentrate on remodelings and store expansions.