Tops Markets files for Chapter 11 bankruptcy protection
In an effort it said is directed at reducing its debt load, Tops Markets on Wednesday filed for Chapter 11 bankruptcy protection as part of a financial restructuring. The Williamsville, N.Y.-based operator of 169 supermarkets and five franchise stores said that it has received sufficient funding to keep it liquid enough to support its operations as it completes a restructure.
Tops said that the operations would be funded through a $125 million debtor-in-possession term loan financing facility from certain noteholders, as well as $140 million DIP asset-based revolving loan from Bank of America. The company expects to receive court approval to use these funds to support operations as it completes a court-supervised restructuring process. Tops also said that it intends to pay vendors and suppliers in full under normal terms for goods and services provided after the filing.
“We believe the financing that we received from our noteholders is a vote of confidence in our business,” Tops CEO Frank Curci said. “Our operations are strong and we have an outstanding network of stores and a talented team to support them. We are now undertaking a financial restructuring, through which we expect to substantially reduce our debt and achieve long-term financial flexibility. This will enable us to invest further in our stores, create an even more exceptional shopping experience for our customers and compete more effectively in today’s highly competitive and evolving market.”
In the company’s filing, FTI Consulting senior managing director Michael Buenzow, who the company retained in December, cites among the challenges facing Tops roughly $450 million in incremental debt that it took on as part of its acquisition by Morgan Stanley and subsequent transactions. As a result, “it has been unable to overcome the debt burden placed on it as a result of the aforementioned transactions,” the filing says. It also outlines the grocery industry challenges Tops has faced — coupled with the its 85% unionized workforce. These factors have combined to put pressure on Tops’ profit margin, Buenzow wrote. He also cites an inability to make capital investments because of its debt. The company also has been making payments to a Teamsters pension fund related to its acquisition of Erie Logistics.
In addition to committing to continue paying suppliers and vendors, Tops said it expects to operate as normal as it navigates the restructuring process.
“Tops has gained strong market share and we continue to distinguish ourselves by offering quality products at affordable prices with superior customer service,” Curci said in a letter to suppliers. “We have an outstanding network of stores and a strong operational team to support them. Through this financial restructuring, we intend to substantially reduce our debt and enhance our long-term financial flexibility, allowing us to invest further in our stores, create an even better shopping experience for our customers and compete more effectively in today’s highly competitive and evolving market.”
Tops said that the operations would be funded through a $125 million debtor-in-possession term loan financing facility from certain noteholders, as well as $140 million DIP asset-based revolving loan from Bank of America. The company expects to receive court approval to use these funds to support operations as it completes a court-supervised restructuring process. Tops also said that it intends to pay vendors and suppliers in full under normal terms for goods and services provided after the filing.
“We believe the financing that we received from our noteholders is a vote of confidence in our business,” Tops CEO Frank Curci said. “Our operations are strong and we have an outstanding network of stores and a talented team to support them. We are now undertaking a financial restructuring, through which we expect to substantially reduce our debt and achieve long-term financial flexibility. This will enable us to invest further in our stores, create an even more exceptional shopping experience for our customers and compete more effectively in today’s highly competitive and evolving market.”
In the company’s filing, FTI Consulting senior managing director Michael Buenzow, who the company retained in December, cites among the challenges facing Tops roughly $450 million in incremental debt that it took on as part of its acquisition by Morgan Stanley and subsequent transactions. As a result, “it has been unable to overcome the debt burden placed on it as a result of the aforementioned transactions,” the filing says. It also outlines the grocery industry challenges Tops has faced — coupled with the its 85% unionized workforce. These factors have combined to put pressure on Tops’ profit margin, Buenzow wrote. He also cites an inability to make capital investments because of its debt. The company also has been making payments to a Teamsters pension fund related to its acquisition of Erie Logistics.
In addition to committing to continue paying suppliers and vendors, Tops said it expects to operate as normal as it navigates the restructuring process.
“Tops has gained strong market share and we continue to distinguish ourselves by offering quality products at affordable prices with superior customer service,” Curci said in a letter to suppliers. “We have an outstanding network of stores and a strong operational team to support them. Through this financial restructuring, we intend to substantially reduce our debt and enhance our long-term financial flexibility, allowing us to invest further in our stores, create an even better shopping experience for our customers and compete more effectively in today’s highly competitive and evolving market.”