CARTERET, N.J. -- Pathmark Stores here was poised last week to emerge from a prepackaged Chapter 11 as a publicly held debt-free company, pending a confirmation hearing in U.S. Bankruptcy Court in Delaware late last Thursday.
merge within 10 business days, with Sept. 12 reportedly set as the formal date. Pathmark filed its bankruptcy petition in mid-July.
Company officials could not be reached last week for comment.
Once Pathmark emerges, industry analysts have said they expect the chain to become available for sale -- though some said they believe Pathmark could operate as an independent company for several months or more before selling the company.
Under the reorganization plan, shareholders would give up their equity rights to the company in favor of the chain's creditors, who would in turn cancel about $1 billion worth of Pathmark's $1.3 billion in longterm debt.
Of the chain's new equity, 77.57% would go to holders of senior subordinated notes; 19.29% to holders of subordinated notes; 2.97% to holders of junior subordinated notes, and 0.17% to holders of Supermarkets General Holdings Corp.'s 11.625% subordinated notes due 2002.
Pathmark also agreed under the plan to issue 10-year warrants to subordinated debt holders, giving them the right to purchase up to 15% of the company's equity at the opening day share price.