A&P looks to boost balance sheet

MONTVALE, N.J. A&P is look to bolster its balance sheet and liquidity availability by inking investment deals with Yucaipa and Tengelmann.

Under the investment agreements, Yucaipa will invest $115 million and Tengelmann will invest $60 million for a total of $175 million of convertible preferred stock pursuant to a private offering.  

“This deal reconfirms Tengelmann’s long-standing commitment to this company and our strategic plans. The addition of Yucaipa as a significant investment partner provider the necessary resources to successfully execute our strategies and navigate through this difficult economy effectively with a focus on building sustainable profitability in the longer-term,” stated Eric Claus, president and CEO of A&P.

Tengelmann will remain the largest single shareholder with an ownership interest of 38.6% with Yucaipa’s ownership interest increasing to 27.6%. In connection with the investment, A&P’s board will be comprised of the nine current directors plus two additional directors nominated by Yucaipa.

The company also released its fiscal 2009 first quarter results for the 16 weeks ended June 20. Sales for the quarter were $2.8 billion versus $2.9 billion. Same-store sales slipped 3.3%, driven by a decline in the rate of retail inflation, more promotional purchases and customers buy less.

Excluding non-operating items, adjusted EBITDA was $80 million versus $96 million last year. Adjusted income from operations was $2.3 million versus $16.2 million in the year-ago period. Reported loss from continuing operations was $58.3 million compared to income of $2.8 million last year.