A&P Supermarket Chain Expected To File For Bankruptcy, Another Harbinger Wipe Out?

Stunning that anyone in this environment can file for Chapter 11. But that is precisely what is happening: supermarket chain A&P, with law firm Kirkland and Ellis and financial advisor Moelis in tow, is about to file for bankruptcy, Bloomberg reports. It is ironic that instead of passing through costs supermarkets are instead opting out to default. Nonetheless, this is likely telling on the status of food margins at major supermarkets.

Some more from DebtWire as of November 10:

Great Atlantic and Pacific is working with restructuring advisor Moelis as the grocer works to ramp up liquidity ahead of 2011 maturities, according to two sources familiar with the situation and four advisory sources not involved. The company heard pitches from potential candidates through last week, said a trader and a proprietary trading desk analyst.

A&P needs to refinance roughly USD 391m of notes that mature in 2011 and 2012, including USD 159m of 5.125% convertible notes due 2011. As part of its turnaround strategy, the chain has been downsizing its footprint while squeezing out cash flow  through sale leaseback transactions and asset sales.

A&P’s USD 260m 11.375% second lien senior secured notes due 2015 have been inching higher, bolstered by the emergence of substantial buyers, said a second and a third trader. Speculation is that Yucaipa, one of the company’s largest shareholders, has been gobbling up the paper, said two bondholders and two sellside analysts. However, Harbinger Capital Management is also  rumored to be taking a position, said the prop desk analyst and a fourth trader.

Great, another Harbinger wipe out.