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    A&P Proposes $380 Million in Convertible Senior Notes to Pay Down Debt

    MONTVALE, N.J. -- The Great Atlantic & Pacific Tea Co. Inc. said yesterday it has proposed a public offering of $380 million aggregate principal amount of senior convertible notes, including $150 million of senior convertible notes due 2011 and $230 million due 2012.

    MONTVALE, N.J. -- The Great Atlantic & Pacific Tea Co. Inc. said yesterday it has proposed a public offering of $380 million aggregate principal amount of senior convertible notes, including $150 million of senior convertible notes due 2011 and $230 million due 2012.

    A&P said it plans to use the net proceeds of the offering to repay existing debt under the bridge loan facility, which was used to finance in part the purchase of Pathmark, as well as to pay the cost of the convertible note hedge transactions.

    The retailer plans to grant the underwriters options to buy up to an additional $15 million aggregate principal amount of the 2011 notes and $25 million aggregate principal amount of the 2012 notes, just to cover over-allotments, and in each case within 13 days of the initial issuance of the notes. Banc of America Securities, LLC and Lehman Brothers, Inc. will be joint book running managers for the proposed note offering.

    The principal amount of the notes will be convertible into shares of A&P's common stock, cash, or a combination of stock and cash, at the company's option. The interest rate, conversion rate, conversion price, and other terms of the notes will be decided at the time of pricing of the offering. Holders of the notes may require A&P to repurchase the notes if the retailer is involved in certain types of corporate transactions, or other events constituting a fundamental change. The notes will be general senior, unsecured obligations of the company.

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

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