A&P goes bankrupt for second time in five years
MONTVALE, N.J. — For the second time in five years, the Great Atlantic & Pacific Tea Co. has filed for chapter 11 bankruptcy protection, according to published reports, and is already in talks to sell some of its locations. Suitors include Acme Markets, Shop & Stop and Key Foods, according to a Reuters report.
According to Drug Store News' annual PowerRx report, A&P posted $350 million in pharmacy revenue in 2014 across its 172 locations with a pharmacy.
The liquidation of as many as 120 of its 296 locations is in progress, The Wall Street Journal reported, which is expected to generate as much as $600 million.
The 156-year-old company has hired Evercore Partners, an investment bank that specializes in selling assets, Reuters reported.
A&P currently operates 296 stores under the brand names A&P, Best Cellars, Food Basics, The Food Emporium, Pathmark, Superfresh and Waldbaum's. 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 with a complete range of products, and all existing customer promotional and loyalty programs will stay in place during this process.
The company announced that it is seeking court approval to enter into a $100 million debtor-in-possession financing agreement with Fortress Investment Group. A hearing to approve the DIP facility has been scheduled for July 20. Upon approval, this facility will enable A&P to continue operating its stores, pay its suppliers, vendors, employees and others in the ordinary course of business.
The company also announced that it had named Christopher McGarry chief restructuring officer, effective July 19, 2015.
“After careful consideration of all 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,” said Paul Hertz, president and CEO A&P. “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 the 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.”
The case is in U.S. Bankruptcy Court, Southern District of New York, Case No: 15-23007.