Reorgd. Pathmark commences trading (PTMK)
September 29, 2000 04:18
Pathmark Stores’ Stock Declines in First Day Back on Market
By Ellen Simon, The Star-Ledger, Newark, N.J.
Sep. 29--Shares of Pathmark Stores Inc. lost almost 15 percent of their value on their first day of trading as some bondholders took the expected step of selling the shares they received when the company emerged from bankruptcy protection.
The stock opened at $14 a share on the Nasdaq market, closing down $2.06 at $11.93. The company filed for Chapter 11 bankruptcy protection July 12 and emerged Sept. 7.
Today's decline wasn't a complete surprise, because many bondholders are prohibited in their charters from holding equity and had to sell their shares.
The reorganization let the company drop $1.1 billion in bonds and canceled leases off its books. It now has about $383 million in debt, part of a $600 million revolving credit provided by a syndicate of banks led by Chase Manhattan Bank.
Carteret-based Pathmark remains an attractive takeover target, analysts say. The chain operates 137 stores in New York, New Jersey and the Philadelphia area. It owns 62 shares in New Jersey, where it's the No. 2 chain after ShopRite.
Pathmark filed for bankruptcy protection after its planned merger with Dutch-based Royal Ahold NV fell through due to Federal Trade Commission objections. The Ahold deal would have absorbed Pathmark's $1.5 billion worth of debt, which was the legacy of a 1987 leveraged buyout.
Its stores are large and have much higher sales volume than most of the chain's competitors. This market also hasn't seen entry by some national chains.
"The Northeast is a place where consolidation hasn't taken place yet, said Mark Husson of Merrill Lynch Global Securities. Larger players looking for stores with a good bone structure are now going to look at Pathmark as a way to get in."
The leading contenders who are active and have the money but don't already have stores in the market are Safeway and Delhaize America, said Gary Giblen, director of research at CL King & Associates.
Management said it isn't looking for buyers.
"We are running the company for the long term," said Harvey Gutman, Pathmark's senior vice president of retail development. "We aren't dressing it up for sale." |
