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Reading through the yahoo boards it appears the thinking is that these 'Convertible Noteholders' have bought 80% of the senior debt. They have partnered with an investor to take their holding and some cash to take over and be the new common stock holders. They propose that their offer would leave about $40 million for the other creditors to split up. I don't have a good number at the moment of how much other debt there is and what the deficit would be for the $40 mil to be split. Rough number tells me about 5 cents on the dollar if all are treated equal.
What I don't understand is how these convertible noteholders can remove themselves from the creditor class they belong and take the equity. Again this is a proposal from them and maybe wishful thinking. I also do not understand if they are able to do that, why the remaining senior unsub debt holders would not split the $40 million as priority holders of debt in BK. That would offer about a 15 cent return on the dollar.
The Yucaipa Companies, LLC is a principal investment firm specializing in private equity and venture capital investments. It prefers to invest in supermarket chains, cafeterias, grocery stores, and other food-related businesses. The firm also seeks to invest in retail, logistics, and manufacturing industries. It makes investments of $50 million to $300 million. The firm was co-founded in 1986 by Mr. Ronald W. Burkle. The Yucaipa Companies, LLC is headquartered at Los Angeles, California with an additional office in Chicago, Illinois.
Mount Kellett Capital Management is a hybrid private equity and hedge fund specializing in investments in buyouts, distressed debt, and special situations. The firm prefers to invest in Asia. Mount Kellett Capital Management was founded in 2008 and is based in New York, New York.
Goldman Sachs Asset Management, L.P. is a privately owned investment manager. It primarily provides its service to unions, sub advised accounts, and accounts at wrap sponsors. The firm also to caters to high net worth individuals, banking or thrift institutions, Investment companies, pension and profit sharing plans, other pooled investment vehicles, charitable organizations, corporations and State or municipal government entities. It manages separate client-focused equity, fixed income, and balanced portfolios for its clients. The firm manages mutual funds for its clients. It also manages hedge funds, hedge fund of funds, and private real estate investments.
"Owning the debt gives you the right to participate in a restructuring". - EI2011
The unsecured creditors took over the drivers seat and we now have a malleable plan. The odd thing is many sold their QUIBS on a day they should of been buyers.
GAPTQ Receives $490 Million Commitment to Sponsor Plan (11/03/11)
Agreement with The Yucaipa Companies, Mount Kellett and Investment Funds Managed by Goldman Sachs Asset Management Positions A&P to Exit Chapter 11 as a Private Company in Early 2012
MONTVALE, N.J.--(BUSINESS WIRE)--The Great Atlantic & Pacific Tea Company, Inc. (A&P) today announced it has entered into an agreement to receive $490 million of debt and equity financing from private investors comprised of The Yucaipa Companies LLC, Mount Kellett Capital Management LP and investment funds managed by Goldman Sachs Asset Management, L.P. The agreement is subject to approval of the U.S. Bankruptcy Court for the Southern District of New York.
The agreement with these investors will enable A&P to complete the restructuring of its balance sheet and emerge from Chapter 11 as a private entity in early 2012. The investment will form the basis of A&P’s plan of reorganization, which the Company anticipates filing prior to November 14.
“This investment commitment is a very important step in A&P’s financial and operational turnaround,” said A&P’s President and Chief Executive Officer Sam Martin. “It positions us for a bright future with solid financial backing from sophisticated investors who know our company and industry well, and who also share our vision for A&P’s future.”
Mr. Martin continued: “We have been working diligently over the last year to execute a successful turnaround at A&P by enhancing the value and in-store experience we provide to our customers and by successfully driving substantial efficiencies across our operations and supply chain to reduce our cost structure. Going forward, these investors are committed to supporting further operational and service improvements. With this fresh capital investment and the Court’s approval of our plan of reorganization, we anticipate emerging from Chapter 11 early next year in a much stronger competitive and financial position.”
Following the closing of the transaction and the Company’s emergence from Chapter 11, A&P’s current Board of Directors will be dissolved, and a new Board of Directors will be appointed in accordance with the terms of the plan of reorganization.
During the Company’s exit process, A&P intends to continue to operate its stores normally with the excellent products and service customers expect.
A&P and its subsidiaries filed voluntary Chapter 11 petitions on December 12, 2010.
About A&P
Founded in 1859, A&P is one of the nation's first supermarket chains. The Company operates 336 stores in seven states under the following trade names: A&P, Waldbaum's, Pathmark, Best Cellars, The Food Emporium, Super Foodmart, Superfresh and Food Basics.
Contacts
A&P Press:
Marcy Connor, 201-571-4453
apmedia@aptea.com
http://www.businesswire.com/news/home/20111103007207/en/AP-Receives-490-Million-Commitment-Sponsor-Plan
Judge Drain Grants Motion to Extend Exclusivity (8/18/11)
Debtor may file a plan through and including 1/16/12.
Solicitation of acceptances is extended through and including 3/16/12.
Source: Epiq Systems [Docket 2370]
Just thought I'd post some info. that a very thoughtful forum member provided to me via. pm besides other helpful comments. Apparently the "trustee" for this investment is (JPMorgan Chase Bank).
Fred/aka no body
Thanks Bud!!!
Fred/aka no body
No claim form is required.
The trustee for the issue will handle it for all investors.
Just receive a United St. Bankruptcy notice of deadline requiring submission of proofs for various debtors to include The Great Atlantic & Pacific Tea Co. Inc., case # 1024549. I have no idea what this means as an individual investor in the 9.375 QUIBS That I bought thru Fidelity many years ago??? Am I supposed to file a claim and if so, I have know idea how to fill out the form. .
GAJTQ has held up better than expected.
I thought it would be near or below after 60 days in bankruptcy.
Actually waiting to buy.
Recovery Percentage of GAJTQ
I am trying to evaluate recovery potential for GAJTQ (formerly GAJ). This is one of four unsecured bonds of Great Atlantic.
Apparently the unsecured bonds are debt guaranteed by subsidiaries. Questions are:
1 - Are the four bonds recourse debt to the parent, or is it guaranteed exclusively by the subsidiary?
2 - The prospectus for GAJ goes on for pages about the difference between restricted and unrestricted subsidiaries. Which of the four unsecured bond series attach to restricted and which attach to unrestricted? What is key implication of belonging to either class?
Until those issues are addressed, it is difficult to see how any residual value in the parent after covering the DIP financing and secured debt might be applied to the unsecured bonds.
Does anyone here have insight on those issues?
I bought before the halt, and got lucky yesterday and made it better with catching some of those 3.00 shares. Holding some to see what happens here, its a very interesting case...especially with Tengelmann supporting the BK as a 40% common shareholder. Slight chance the common might have a play in them as well because of it IMO, have not located any Tengelmann GAP debt thus far so I guess they are just shareholders since 1979.
Both are trading.
Working with Admin to get the symbol and name updated.
Common:
http://www.otcmarkets.com/stock/GAPTQ/quote
Notes:
http://www.otcmarkets.com/stock/GAJTQ/quote
Is common trading?
MONTVALE, N.J. - December 12, 2010 - The Great Atlantic & Pacific Tea Company, Inc. (A&P) (NYSE: GAP) announced today that it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 process will facilitate A&P's financial and operational restructuring, which is designed to restore the Company to long-term financial health.
http://www.aptea.com/pressRoom_article.asp?id=216
A&P President and Chief Executive Officer Sam Martin said, "We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring. While we have made substantial progress on the operational and merchandising aspects of our turnaround plan, we concluded that we could not complete our turnaround without availing ourselves of Chapter 11. It will allow us to restructure our debt, reduce our structural costs, and address our legacy issues.
Mr. Martin continued, "With the protections afforded by the Bankruptcy Code and the backing of a new, pre-eminent lender, we can make strategic decisions that will benefit the Company over the long term, enabling A&P to emerge with a new capital structure and in a much improved position to exploit its fundamental strengths. Importantly, during this reorganization our stores will operate normally with fully stocked shelves and the excellent service A&P customers expect. Our customers can shop our stores with confidence, and our employees can continue delivering great value and service to our customers every day."
UPDATE 2-A&P owner hires restructuring firm - sources
Fri Dec 10, 2010 3:17pm EST
* Hired restructuring law firm Kirkland & Ellis - sources
* Vendors have been requiring cash on delivery - sources
* A&P operator's shares down 67 pct
* Shares halted for news pending (Adds shares, details on investors, stores)
http://www.reuters.com/article/idUKN1010658020101210?type=companyNews
YUCAIPA, TENGELMANN STOCKHOLDERS
Its biggest stockholders are activist investor Ron Burkle and the German retail group Tengelmann. Burkle's Yucaipa investment firm has built up a large position in the company's debt recently, putting it in a stronger position to take control of the company if it enters bankruptcy as part of the restructuring, people familiar with the firm's activities said. [ID:nSGE6A10LO]
Around mid-September, A&P's net debt was $1.48 billion -- roughly eight times its market value. The company's property was worth $1.37 billion at book, but it is burning through $55 million to $65 million of cash every quarter.
"When your creditors begin to get nervous about your credit situation, they request cash on delivery and refuse to extend you any credit," said Scott Peltz, a restructuring expert at McGladrey's Financial Advisory Services Group in Chicago. "The liquidity crisis then becomes enhanced by the need to essentially fund their inventory with cash, seriously exacerbating the situation."
http://www.kirkland.com/
Great Atlantic & Pacific Tea (GAJ)
$ 6.12 -8.93 (-59.34%)
Volume: 2,281,207
[at the halt]
A&P Said to Consider Filing for Bankruptcy Protection
By Lauren Coleman-Lochner, Jeffrey McCracken and Jeff St.Onge - Dec 10, 2010 Great Atlantic & Pacific Tea Co., the once-dominant grocery-store chain founded in 1859, may file for bankruptcy in the coming days to restructure debt, two people with knowledge of the matter said.
The shares fell $1.90, or 67 percent, to 93 cents at 1:24 p.m. in New York Stock Exchange trading, the biggest drop in at least three decades, before trading was halted pending news.
A filing to reorganize under court protection may come as soon as this weekend, said the people, who declined to be identified because the matter is private. A&P hired law firm Kirkland & Ellis LLP to represent it in negotiations with creditors and in any Chapter 11 proceeding, the people said.
Lauren La Bruno, an A&P spokeswoman, didn’t return an e- mail and a call seeking comment.
The Montvale, New Jersey-based grocer has struggled to cope with mounting competition from discounters such as Target Corp. and Wal-Mart Stores Inc., which are offering more fresh food to attract customers. A&P, which operated almost 16,000 stores in the 1930s, now runs about 400 locations under its namesake banner as well as SuperFresh and Food Emporium. In 2007, it bought the Pathmark Stores supermarket chain for $678 million.
A&P has lagged behind rivals on fresh food and presentation, said Jim Hertel, a managing partner at Willard Bishop Consulting, a Barrington, Illinois-based firm which advises retailers and suppliers. A&P also has been hamstrung by a heavily unionized workforce, he said.
Less Flexibility
A&P’s labor costs mean the company has less flexibility to invest in other parts of the store, Hertel said today in a telephone interview.
The grocer in October said sales in the quarter ended Sept. 11 fell 7.1 percent to $1.9 billion and its net loss almost doubled to $153.7 million in that period. A&P had $94 million in cash and short-term investments as of Sept. 11, a 63 percent decline from $252 million as of the end of February.
Egan-Jones Ratings Company today lowered the company’s credit rating to C from CC.
The company had about $1.5 billion in net debt as of September. It had an $876 million net loss on $8.8 billion in 2009 sales, its third straight annual shortfall.
A&P “may be illiquid at some point in the near term,” Standard & Poor’s said in July, issuing a downgrade of the company’s corporate credit rating to CCC.
Chief Executive Officer Sam Martin was hired in July to help lead a turnaround, replacing Ron Marshall, who had held the job for about six months. Martin has said then that A&P is examining its business in an effort to improve results.
Sale-Leaseback
The company announced a $89.8 million sale-leaseback of six stores last month. In August, A&P said it will close 25 stores in five states as part of its turnaround plan.
The Great American Tea Co. began as a store on Vesey Street in lower Manhattan, selling coffee, tea and spices and dispatching salesmen in horse-drawn carriages through New England, the Midwest and South, according to the company’s website. The grocer renamed itself The Great Atlantic & Pacific Tea Co. in 1869.
To contact the reporters on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Jeff St.Onge at jstonge@bloomberg.net.
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SECURITY DESCRIPTION: The Great Atlantic & Pacific Tea Co., 9.375% Senior Quarterly Interest Bonds (QUIBS), issued in $25 denominations, redeemable at the issuer's option on or after 8/11/2004 at $25 per share plus accrued and unpaid interest, and maturing 8/01/2039. Distributions of 9.375% ($2.34375) per annum are paid quarterly on 2/1, 5/1, 8/1 & 11/1 to holders of record on the 15th day prior to the payment date (NOTE: the ex-dividend date is at least 2 business days prior to the record date). Distributions paid by these debt securities are interest and as such are NOT eligible for the 15% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders. Units are expected to trade flat, which means accrued interest will be reflected in the trading price and the purchasers will not pay and the sellers will not receive any accrued and unpaid interest. The bonds are senior debt securities of the company and will rank equally with all existing and future senior obligations of the company.
9.375% Senior Notes due 8/01/2039
GAP.GI / CUSIP: 390064202
9.125% Senior Notes due 12/15/2011
GAP.GE / CUSIP: 390064AH6
5.125% Convertible Senior Notes due 6/15/2011
GAP.GF / CUSIP: 390064AJ2
6.75% Convertible Senior Notes due 12/15/2012
GAP.GG / CUSIP: 390064AK9
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