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The Great Atlantic & Pacific Tea Co. (A&P) has retained investment bank Credit Suisse to enable it to look into strategic alternatives that could include a sale of the company, according to published reports citing a letter sent to employees and union leaders.
A&P chairman Greg Mays wrote in the July 22 letter that the company’s primary aim is to raise new capital for store improvements, but admitted that a sale of the company is one of four possible alternatives.
The Yucaipa Cos., a Los Angeles-based investment firm that specializes in buying and selling supermarket chains and is the biggest investor in A&P, was described by The Record of Bergen County, N.J., as being “eager to sell its stake in” the grocer. The newspaper received a copy of Mays’ letter, along with a two-page talking points question-and-answer briefing document, from a company employee. Montvale, N.J.-based A&P is located in Bergen County.
“While it’s premature to speculate on the exact outcome of the strategic review process, we want to be clear that this financial initiative is the first step toward building a stronger future for our business,” the document noted, although The Record spoke with an unidentified store-level associate in a management position who said that slashed store labor budgets and the limiting of part-time workers to 20 hours had led many to believe that a sale was imminent.
In a company statement, Mays said, “Our goal is to build on our positive momentum and grow A&P in a way that benefits our customers, associates, suppliers and partners.” He went on to note that the grocer has made “significant strides in improving the company’s operations and profitability,” with liquidity of about $200 million and bank debt obligations reduced by almost 30 percent over the past year.
Union leaders agree that A&P seems to be doing better financially. John Niccollai, president of Little Falls, N.J.-based Local 464A of the United Food and Commercial Workers union, told The Record that although the company isn’t making a profit yet, “the hemorrhaging has stopped and they’re out of intensive care.”
According to the talking-points memo, A&P’s board hasn’t set a deadline for the strategic review.