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The Penn Traffic Co. has entered into a forbearance agreement with all of its senior working capital lenders and General Electric Capital Corp. (GE Capital), as agent for the lenders.
“We continue to work closely with our lenders and appreciate the flexibility that they have provided us with this latest agreement,” said Penn Traffic president and CEO Gregory J. Young.
Under the terms of the agreement, the participating lenders will keep providing letters of credit and other forms of credit to the grocer through at least Nov. 25, 2009. The reason for the new agreement was GE Capital’s notification at the end of last month that Penn Traffic was in technical default of certain provisions of its current credit agreements.
In connection with the agreement, the grocer’s board of directors has hired Ronald F. Stengel, senior managing director with New York-based financial advisory firm Conway Del Genio Gries & Co., LLC, as chief restructuring officer. Stengel’s firm has worked with Penn Traffic on a range of matters, among them extensive financial advisory services from 2006 through 2008.
Penn Traffic expects that its procurement partner, Keene, N.H.-based C&S Wholesale Grocers, Inc., will continue providing services to the grocer without interruption.
Syracuse, N.Y.-based Penn Traffic owns and operates supermarkets under the P&C, Quality and BiLo banners in upstate New York, Pennsylvania, Vermont and New Hampshire. Retail supermarkets and consumers became the company’s main focus after it sold off its wholesale business segment during fiscal 2009.