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    A&P Gets $490M Commitment to Sponsor Reorg Plan

    Agreement struck to enable exit from Chapter 11 in early 2012

    The Great Atlantic & Pacific Tea Co. Inc. (A&P) today has entered into an agreement to receive $490 million of debt and equity financing from private investors The Yucaipa Cos. LLC, Mount Kellett Capital Management LP and investment funds managed by Goldman Sachs Asset Management L.P. The deal is subject to approval of the U.S. Bankruptcy Court for the Southern District of New York.

    Under the agreement, A&P, which filed for Chapter 11 in December 2010, would be able to complete the restructuring of its balance sheet and emerge from Chapter 11 as a private company early next year. The funds will form the basis of A&P’s reorganization plan, which it expects to file before Nov. 14.

    “This investment commitment is a very important step in A&P’s financial and operational turnaround,” noted Sam Martin, President and CEO of the Montvale, N.J.-based grocer, which operates 336 stores in seven states under the A&P, Waldbaum's, Pathmark, Best Cellars, The Food Emporium, Super Foodmart, Superfresh and Food Basics banners. “It positions us for a bright future with solid financial backing from sophisticated investors who know our company and industry well, and who also share our vision for A&P’s future.”

    Added Martin: “We have been working diligently over the last year to execute a successful turnaround at A&P by enhancing the value and in-store experience we provide to our customers and by successfully driving substantial efficiencies across our operations and supply chain to reduce our cost structure. Going forward, these investors are committed to supporting further operational and service improvements. With this fresh capital investment and the court’s approval of our plan of reorganization, we anticipate emerging from Chapter 11 early next year in a much stronger competitive and financial position.”

    After the transaction closes and the company emerges from Chapter 11, A&P’s current board of directors will be dissolved, and a new board appointed according to the terms of the reorganization plan. Throughout the process, A&P plans to continue to operate its stores as usual.
     

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