The Great Atlantic & Pacific Tea Co. is exploring options to sell after emerging from bankruptcy last year, according to an internal memo sent to employees
The memo is reported to have been send by Great Atlantic Chairman Gregory Mays to store managers, laying out a number of options for the company to fund future growth. A sale is the most likely course of action according to a person familiar with the matter, cited by the Wall Street Journal. Such a move could value the company at $1 billion or more.
"This is about options to grow the business, not about being in distress," a spokesman said. "It's a desire for capital, not a need for capital."
Potential buyers include rivals Kroger, Netherlands-based Ahold, and Cerberus Capital Management LP, the publication’s source said.
The company emerged from Chapter 11 bankruptcy protection in March 2012 after securing $490 million in debt and equity financing and closing dozens of its banner stores, including Food Emporium, Pathmark, and Super Fresh, as well as A&P. It now operates about 320 stores.
A&P is "still working toward obtaining profitable sales," according to the memo. Since emerging from bankruptcy, it was able to increase its liquidity by $200 million and reduce its debt obligations by 30%,
"In order for our company to continue to grow, we must invest in it," the memo said, noting it has tapped Credit Suisse AG to assist in reviewing its "strategic alternatives."
A&P also "may decide just to capitalize our growth plan at a slower pace from internal cash flow," the memo said
