A&P Files Bankruptcy; Seeks to Sell Stores

The Great Atlantic & Pacific Tea Co. (A&P) filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York. As part of the filing the Montvale, N.J.-based chain said it has executed asset purchase agreements covering approximately 120 stores at a purchase price of approximately $600 million. A&P currently operates 296 stores under the A&P, Best Cellars, Food Basics, The Food Emporium, Pathmark, Superfresh and Waldbaum's banners. All asset and store sales will be conducted through a Court-supervised sale process, subject to Court approval and certain other conditions. The sale process could include a possible credit bid for certain assets to be purchased by A&P's current investors. A&P will continue to conduct business and serve customers at its stores during the Court-supervised sale process. A&P has decided, however, that it will close 25 stores in the near-term due to lack of interest and significant ongoing store operating losses. The open stores are fully stocked and all existing customer promotion and loyalty programs will stay in place during this process. A&P said it is seeking Court approval to enter into a $100 million debtor-in-possession (DIP) financing agreement with Fortress Investment Group. A hearing to approve the DIP facility has been scheduled for July 20, 2015. Upon approval, A&P will continue to operate its stores, pay suppliers, vendors, employees and others in the ordinary cost of business. The Company also said it has named Christopher McGarry Chief Restructuring Officer, effective July 19, 2015. "After careful consideration of its alternatives, we have concluded that a sale process implemented through Chapter 11 is the best way for A&P to preserve as many jobs as possible, and maximize value for all stakeholders," Paul Hertz, president and CEO of A&P, said in a statement. "The interest from other strategic operators has been robust during the Company's sales process to date, and we have every expectation that will continue in Chapter 11. And while the decision to close some stores is always difficult, these actions will enable to Company to refocus its efforts to ensure the vast majority of A&P stores continue operating under new owners as a result of the Court-supervised process. We greatly appreciate the continued support of our customers, suppliers and employees, who have maintained an unwavering commitment to our business and our customers." For more information, visit www.apteanotice.com.