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As Expected, The Great Atlantic & Pacific Tea Company, Inc. (A&P) Files for Chapter 11 Protection Sunday $GAP

|Includes: The Great Atlantic & Pacific Tea Co. Inc. (GAP)

 Late Sunday, The Great Atlantic & Pacific Tea Company, Inc. and a large group of affiliated companies filed for chapter 11 bankruptcy protection in White Plains, New York.  Rumors of the companies' impending bankruptcy filing began circulating late last week.  The companies, which assert in court filings that they are "one of the nation’s leading supermarket and food retailers," operate 395 supermarkets and food stores located in eight states and the District of Columbia.  The stores operate under the brand names A&P, Waldbaum’s, SuperFresh, Pathmark, Food Basics, The Food Emporium, Best Cellars, and A&P Liquors.  Court filings report assets of approximately $2.5 billion against liabilities of $3.2 billion.  The companies employ approximately 41,000 people.

Revenues for the companies' stores have declined significantly over the last two years - dropping from $9.5 billion in fiscal 2008 to only $8.4 billion for the twelve months ended September 11, 2010.  Earnings before interest, taxes, depreciation, and amortization (or EBITDA) and EBITDA margin have declined even more steeply over the same period.  EBITDA has declined from $333 million to $104 million and EBITDA margin has decreased from 3.5% to 1.2% (both measured over the same period as revenues). 

The companies reported that Sunday's bankruptcy filings were necessary because they have been "unable to obtain necessary cost concessions from their business partners, and liquidity has continued to deteriorate."  Additionally, the companies faced $13.4 million in interest payments which were due December 15th.  However, A&P asserts in court filings that it is "well-positioned to continue" its restructuring efforts through the chapter 11 cases.  The debtors are seeking to immediately reject leases for more than 73 "dark" stores and have secured an $800 million DIP facility which will "refinance the Debtors’ existing secured borrowing facility and will provide borrowing availability through a $450 million asset based revolver and a $350 million term loan."

Key court filings to date include (click on the title of any document for more information or to purchase):

For access to all major pleadings filed in this case, please visit http://www.chapter11cases.com/The-Great-Atlantic-Pacific-Tea-Company-Incdba-AP-Waldbaums-SuperFresh-Pathmark-Food-Basics-The-Food-Emporium-Best-Cellars_c_1855.html