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MONTVALE, N.J. - After selling and closing more than two dozen stores while it seeks a new owner for its 8 O' Clock coffee subsidiary, A&P stands to gain more than $300 million if all goes as planned, according to a report in yesterday's Star-Ledger, a Newark, N.J. daily newspaper.
The disclosure was among the key details divulged in a presentation made last Friday at a Lehman Brothers investors' conference in Orlando, Fla. by Mitch Goldstein, the Tea Co.'s c.f.o.
With the grocery chain facing $1 billion debt load, the projected $300 million will go a long way in helping the chain remain a viable competitor in its core markets, according to the paper. However, Merrill Lynch analyst Mark Husson was quoted as saying the Montvale, N.J. company will need to raise even more cash in a continuing effort to combat the weak economy, intense competition, and internal challenges ranging from restating earnings to management upheaval.
After posting a quarterly loss of $29.7 million in January, executives announced their intent to explore options related to selling assets to make debt payments. The first such pact was announced in early February with separate agreements for the sale of nine supermarkets in northern New England, to Stop & Shop (Quincy, Mass.) and Big Y Foods (Springfield, Mass.) for an estimated $80 million.
That deal was followed by A&P's sale of seven Kohl's supermarkets in Madison, Wis. to Copps Corp., a subsidiary of Roundy's, Inc. A&P, which operates 31 Kohl's stores in the Madison and Milwaukee markets, also announced it was exploring the sale of the Milwaukee area stores.
The anticipated $300 million is based on an assumption that A&P will close deals for its remaining 23 Kohl's and its Eight O'Clock coffee subsidiary, the latter of which is expected to fetch roughly $100 million, according to yesterday's report.
Goldstein also told investors A&P will spend approximately $175 million - $65 million less than last year - for store remodeling and restoration projects.