A US bankruptcy court has approved the Great Atlantic & Pacific Tea Co’s (A&P) plan to exit Chapter 11 bankruptcy following a commitment from retail magnate Ron Burkle to inject funds into the firm and oversee moves to trim the fat from A&P’s retail operations.
A&P has secured a US$490m financing deal with Burkle’s investment vehicle Yucaipa Cos. In addition to his company’s debt and equity commitment, Burkle will oversee A&P’s reorganisation as chairman.
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Under the proposal, the company, which operates the A&P, Food Emporium and Pathmark banners, will look to close unprofitable stores and reduce its labour costs. This will be achieved through new collective labour agreements with the UFCW and local unions that will see employees take pay cuts of between 3% and 8.2%.
Unions will meet with the company today (28 February) to finalise the “buyout language” – the “last major issue” to be addressed before modifications to the Collective Bargaining Agreements are approved and a new contract is distributed to stores, the UFCW said.
