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The Great Atlantic & Pacific Tea Co. (A&P) has announced that it “has entered into an agreement to receive $490 million of debt and equity financing from private investors comprised of The Yucaipa Companies LLC, Mount Kellett Capital Management LP and investment funds managed by Goldman Sachs Asset Management, L.P. The agreement is subject to approval of the U.S. Bankruptcy Court for the Southern District of New York.” Ron Burkle, the supermarket magnate who runs Yucaipa, will become the chairman of A&P; the investment will propel the troubled retailer out of bankruptcy.

"This investment commitment is a very important step in A&P's financial and operational turnaround," says Sam Martin, A&P’s president/CEO. "It positions us for a bright future with solid financial backing from sophisticated investors who know our company and industry well, and who also share our vision for A&P's future."

A&P has been in bankruptcy protection since December 2010.

The Bergen Record reports that organized labor appears to be viewing the development favorably.

“We're enthused that people are showing interest in the company and they want to invest money in the company," said John T. Niccollai, president of United Food and Commercial Workers Local 464A, based in Little Falls.

And, the Record writes, “Harvey Whille, president of Local 1262, based in Clifton, which represents 2,800 Pathmark employees in New Jersey, said that ‘it's still a little early for us to make a call, to say that there's anything that's absolutely certain in this matter.’ But, Whille said that if Ron Burkle ... ends up in charge of the turnaround, it could be good news for workers, because Burkle has been willing to deal with unions at other supermarkets he has a stake.”

The story goes on: “Niccollai said Burkle ‘is someone that knows the business, and of course that's an asset.’ Niccollai said Burkle was in New Jersey seven or eight years ago when he took over and operated the Grand Union Co., and sold stores to other operators. ‘That was a success story and obviously we like dealing with success stories,’ Niccollai said. ‘Hopefully it's going to work out to everyone's advantage’.”
KC's View:
I’m a little less sanguine about A&P’s prospects, simply because I’m simply not convinced that the brand has not been so damaged that it may not be worth saving. (I’m know there are some double negatives in there, but you get my point.)

I think Yucaipa is going to sell off stores. That’s the long-term goal.