The Great Atlantic & Pacific Tea Co. 9.375% QUIBS (GAP.GI)

[56Chevy]

ASM Capital LP doesn't much care for the Plan either.

OBJECTION TO DEBTORS’ MOTION FOR AN ORDER AUTHORIZING THE DEBTORS TO (A) ENTER INTO CERTAIN SECURITIES PURCHASE AGREEMENTS FOR A $490 MILLION NEW CAPITAL INVESTMENT AND (B) PAY CERTAIN FEES IN CONNECTION THEREWITH, EACH TO SUPPORT DEBTORS’ PLAN OF REORGANIZATION

ASM Capital LP (“ASM”), as holder of approximately $10 million in face amount of the 9.375% senior quarterly interest bonds due August 1, 2039 (the “Quarterly Interest Bonds”) issued by The Great Atlantic & Pacific Tea Company, Inc. (“A&P” and together with its debtor affiliates, the “Debtors” or the “Company”), hereby objectsto the Debtors’ motion (the “Motion”) [Dkt. No. 2797] for an order authorizing, among other things, entry into certain securities purchase agreements (the “Securities Purchase Agreements”) with certain affiliates of The Yucaipa Companies LLC (“Yucaipa”), one of the Debtors’ controlling shareholders, and with certain select holders of the Debtors’ unsecured notes (the “Supporting Noteholders” and together with Yucaipa, the “Investors”), providing for an infusion of $490 million in new debt and equity financing (the “New Money Commitment”).1 In support of its objection, ASM respectfully represents as follows:

PRELIMINARY STATEMENT
1. The Debtors, without having marketed the Company to any parties other than the Investors and with no intention of undertaking an additional marketing process (and actually being prohibited from doing so), seek approval of what amounts to a private sale of the Company (in violation of the absolute priority rule) to a group that includes one of the Debtors’ largest shareholders (Yucaipa). The Motion raises a host of serious problems. If the Debtors have their way, the Motion will be heard on an expedited basis, with no opportunity to take discovery, and with little or no evidence presented. There will be no market test – past or future – of the Company’s value. Valuation, it appears, will be dispensed with entirely, as the Debtors have not deigned even to state what the Company might be worth. And this Court will be asked to approve a transaction, the basic economic terms of which have not been fully disclosed, including terms necessary to ascertain whether Yucaipa is receiving preferential, and therefore prohibited, treatment.

Source:

http://www.kccllc.net/documents/1024549/1024549111111000000000011.pdf