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    A&P Issues Convertible Senior Notes

    MONTVALE, N.J. -- The Great Atlantic & Pacific Tea Co. Inc. yesterday issued its public offering of $165 million aggregate principal amount of convertible senior notes due 2011 and $255 million aggregate principal amount of convertible senior notes due 2012.

    MONTVALE, N.J. -- The Great Atlantic & Pacific Tea Co. Inc. yesterday issued its public offering of $165 million aggregate principal amount of convertible senior notes due 2011 and $255 million aggregate principal amount of convertible senior notes due 2012.

    Banc of America Securities, LLC and Lehman Brothers, Inc. acted as joint book running managers for the offering.

    As reported earlier, A&P entered into convertible note hedge and warrant transactions with financial institutions that are affiliates of the underwriters of the notes to boost the effective conversion price of the notes. The grocer had also entered into share lending agreements with affiliates of the underwriters to lend such affiliates up to 11,278,988 shares of its common stock.

    According to these agreements, the company loaned 8,134,002 shares of its common stock to these entities, which then sold 6,300,752 of them to the public in a public offering issued this week. A&P didn't receive any proceeds from the sale of these shares, other than a nominal lending fee.

    The net proceeds of the offering of the notes were used to prepay in full and terminate the company's $370 bridge loan facility and pay part of the net costs of the convertible note hedge and warrant transactions.

    UBS was A&P's financial adviser in these financing transactions.

    A&P operates 455 stores in eight states and the District of Columbia under the following bnners: A&P, Pathmark, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, and Food Basics.

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