The parent company of US retailer A&P has teamed up with investment vehicle Yucaipa to shore up the balance sheet of the supermarket chain.
German conglomerate Tengelmann is to spend US$60m on preferred stock, while Yucaipa, the fund led by investor Ron Burkle, plans to invest some US$115m.
Tengelmann will remain the largest shareholder in A&P, with a 38.6% stake. Yucaipa, which will have two directors on the A&P board, will own 27.6%.
News of the investment came as A&P announced its fiscal first-quarter results, which included a 3.3% fall in comparable-store sales. Turnover dipped from US$2.9bn a year ago to US$2.8bn for the three months to 20 June.
Adjusted EBITDA reached US$80m, compared to US$96m a year earlier. Adjusted income from operations stood at US$2.3m against US$16.2m a year ago.
A&P made a reported loss from continuing operations of US$58.3m, compared to income of $2.8m a year earlier.
President and CEO Eric Claus said the last three months had been a “challenging” quarter for A&P.
“Our decline in comparable-store sales this quarter was driven by a decline in the rate of our retail inflation, more promotional purchases and customers buying less,” Claus said.
The A&P chief added that Yucaipa’s investment would help the business ride out the downturn.
“The addition of Yucaipa as a significant investment partner provides the necessary resources to successfully execute our strategies and navigate through this difficult economy effectively with a focus on building sustainable profitability in the longer-term,” he said.
Separately, A&P outlined plans to offer US$225m in senior secured notes due 2015.