SYRACUSE, N.Y. -- Penn Traffic has agreed to sell all five of its warehouses and then lease them back in a transaction that will give the retailer-distributor based here $37 million that it will use to reduce debt and emerge from bankruptcy protection.
The announcement came as Penn Traffic filed a plan of reorganization with U.S. Bankruptcy Court of the Southern District of New York. That filing was delayed multiple times as the company sought to finalize a plan to sell various assets and lease them back. Penn Traffic has been under federal bankruptcy protection since May 2003.
Equity Industrial Partners, Needham, Mass., would buy the warehouses, which consist of 514,000-square-foot grocery and 241,000-square-foot perishable facilities in Syracuse; 390,000-square-foot grocery and 195,000-square-foot perishable facilities in DuBois, Pa.; and a 274,000-square-foot health and beauty distribution center in Jamestown, N.Y., Penn Traffic said. The company would lease the centers from the new owner for an initial term of 15 years with four five-year renewal options.
The company said previously it was seeking a buyer for 17 corporate stores in addition to the warehouses for a sale-leaseback, but made no announcement of a deal for the stores. Marc Jampole, a spokesman for Penn Traffic, told SN last week the company had no comment as to whether it would continue pursuing such a plan.
The warehouse sale provides Penn Traffic "with the financial strength and flexibility to emerge from Chapter 11 with dramatically reduced debt and strong liquidity to fund our operations going forward," Robert Chapman, Penn Traffic's president and chief executive officer, said in a statement. "The company is now well positioned to complete our restructuring efforts within the next couple of months."
Jampole told SN that Penn Traffic has plans to emerge from bankruptcy sometime within the next three months.
Penn Traffic also said it expects to have a working capital revolving credit facility in place to help fund operations, but Jampole would not disclose details at this time about the amount sought or the provider.
A hearing to approve the new plan of reorganization is scheduled for Jan. 27.
Penn Traffic operates 109 supermarkets in Pennsylvania, upstate New York, Vermont and New Hampshire under the Bi-Lo, P&C and Quality trade names. It also operates a wholesale business serving 80 licensed franchises and 39 independent operators.
Since filing for bankruptcy protection in 2003, Penn Traffic has sold or closed more than 100 stores, including the Big Bear chain in West Virginia and Ohio. The bankruptcy declaration was the company's second in four years.
