In a filing that seemed to have the support of major creditors, Great Atlantic & Pacific Tea Co. has secured a commitment for $800 million in financing from JPMorgan Chase. The company said all current stores in Delaware and elsewhere will remain open and fully stocked. Once a nationwide chain, A&P now has 395 stores on the East Coast. It added market share in Delaware with the purchase of Pathmark, but continues to battle a growing number of competitors, the most recent being Food Lion, the non-union chain that features smaller stores designed for busy shoppers. Food Lion has also put its stores in working class neighborhoods in Delaware, allowing some customers, without cars, to shop at the stores.
The company has been struggling with a weak economy and a heavy debt load in its attempt to fend off competitors that also include Target and Wal-Mart.
A&P President and Chief Executive Officer Sam Martin said, “We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring. While we have made substantial progress on the operational and merchandising aspects of our turnaround plan, we concluded that we could not complete our turnaround without availing ourselves of Chapter 11. It will allow us to restructure our debt, reduce our structural costs, and address our legacy issues.”
As the Company implements its financial and operational restructuring, it intends to continue and accelerate most of the basic elements of the turnaround plan announced in October, including:
- A completely new management team is in place;
- Reducing structural and operating costs;
- Improving the A&P value proposition for customers; and
- Enhancing the customer experience in stores.
A&P’s major shareholders support the action announced today and believe that the Company’s plan will advance and accelerate the comprehensive turnaround effort already underway.
The Company has entered into an $800 million DIP facility with JPMorgan Chase & Co. The Company’s ability to get borrowings under such facility is subject to satisfaction of customary conditions and receipt of court approval. The DIP facility is being fully underwritten by JPMorgan Chase. A hearing to approve a portion of the facility has been scheduled for December 13.
The Company expects to receive full authority to pay employee wages and benefits on an uninterrupted basis
Founded in 1859, A&P is one of the nation’s first supermarket chains. The Company operates 395 stores in eight states and the District of Columbia under the following names: A&P, Waldbaum’s, Pathmark, Best Cellars, The Food Emporium, Super Fresh and Food Basics.