on track
Grand Union Arranges $300 Million Credit Facility
WAYNE, N.J--(BUSINESS WIRE)--April 27, 1998--
Plans to Commence Solicitation of Consents Shortly
The Grand Union Company said today that it has signed a firm underwritten commitment letter from S.B.C. Warburg Dillon Read and Lehman Brothers for a $300 million credit facility as part of the Company's proposed capital restructuring plan. Receipt of this commitment was an integral requirement of the capital restructuring plan negotiated with an unofficial committee of Senior Noteholders representing approximately $275 million of the Company's $595 million in Senior Notes and announced on March 30.
As previously announced, the Company expects to commence the solicitation of consents from the Senior Noteholders and the holders of its preferred stock within the next two weeks. Grand Union anticipates the filing of a voluntary prepackaged Chapter 11 petition within approximately 30 days after the commencement of the solicitation. Under terms of the proposed restructuring plan, trade and business creditors will be unimpaired and will continue to be paid in the ordinary course of business.
J. Wayne Harris, Chairman of the Board and Chief Executive Officer, said, "It is our expectation that we will emerge from a voluntary prepackaged bankruptcy this summer as a vibrant new Company, significantly deleveraged and prepared to move ahead aggressively with a growth-oriented five-year business plan. Upon approval of our financial restructuring by the Noteholders and confirmation in the bankruptcy court, we will be well positioned to become one of the premier supermarket chains in the areas in which we operate."
Mr. Harris said, "Implementation of the capital restructuring plan will mark the first time in more than 10 years that Grand Union can operate without the onerous debt burden that has prevented it from being truly competitive. The deleveraging will eliminate all $595 million of the Company's Senior Notes will help to provide the necessary funds for the Company to execute its business plan and take advantage of our strong growth and capital development potential. It is important to note that the plan intends that all trade and business creditors will be unimpaired."
The Company also announced that five members of its Board of Directors have resigned. They are James J. Costello, Clifford A. Miller, Geoffrey T. Moore, Roger E. Stangeland and J. Richard Stonesifer. The resigning Directors were representatives or appointees of preferred shareholders. No successors were named and the Board is now comprised of the remaining six Directors.
Pursuant to the restructuring plan, the Board of the reorganized Company shall include Mr. Harris, Jack W. Partridge, Vice Chairman and Chief Administrative Officer, and Gary M. Philbin, President and Chief Merchandising Officer. The Board will also include eight independent Directors to be nominated by the unofficial committee of Senior Noteholders.
Additionally, the Company said it received a letter from representatives of the preferred shareholders stating that they do not approve the terms of the capital restrucuturing plan. They further stated they do not believe the Company may solicit consents to the capital restructuring plan without their consent. The Company said it believes that the position stated by the representatives of the shareholders is without merit, and as such, the Company is proceeding to implement the agreement in principle reached with the Noteholders Committee.
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