Court approval will let Penn Traffic emerge from bankruptcy
March 24, 2005
by Jeff Gelski
SYRACUSE, N.Y. — Penn Traffic Co. looks to emerge from Chapter 11 bankruptcy this month. The company will do so with a new executive vice-president – chief financial officer.
A judge at the U.S. Bankruptcy Court for the Southern District of New York confirmed Penn Traffic Co.’s First Amended Plan of Reorganization on March 17.
"Penn Traffic will emerge from Chapter 11 with a solid financial platform, a core of healthy and competitive supermarkets, and strong bakery and wholesale/franchise operations," said Robert Chapman, president and chief executive officer.
In addition, Penn Traffic named Randy P. Martin as the new executive vice-president and c.f.o. on March 15. Formerly the company’s senior vice-president – finance, Mr. Martin replaces Robert B. Dimond. He resigned for personal reasons unrelated to the company.
Mr. Dimond served in his position at Penn Traffic for less than three months. Penn Traffic named him as executive vice-president and c.f.o. on Jan. 4.
Penn Traffic entered Chapter 11 in May 2003. The company filed its First Amended Plan of Reorganization in December 2004.
According to the plan, when Penn Traffic emerges from bankruptcy:
• Penn Traffic’s post-petition secured lenders will be repaid in full in the amount of about $30 million to $40 million.
• Holders of allowed unsecured claims in the aggregate amount of about $295 million to $305 million will receive their pro rata share of 100% of the newly issued common stock of reorganized Penn Traffic, subject to dilution in respect of up to 10% of the new common stock reserved for a management incentive program yet to be determined.
• Penn Traffic’s existing common stock will be cancelled.
Penn Traffic will need about $30 million in cash to make the payments required. Penn Traffic expects to enter into a $164 million principal amount exit financing facility. It will consist of a $6 million term loan, a revolver of $130 million and a supplemental real estate facility of $28 million.
In addition, Penn Traffic will sell its five distribution centers in New York and Pennsylvania to Equity Industrial Partners Corp. for $37 million. Equity Industrial will lease the centers back to Penn Traffic for an initial term of 15 years.
Penn Traffic operates 109 supermarkets in Pennsylvania, New York, Vermont and New Hampshire. They are known under the trade names BiLo, P&C and Quality. Penn Traffic also operates a wholesale food distribution business that serves 79 licensed franchises and 40 independent operators.