The company, founded in 1859, says it will have access to $800 million in debtor-in-possession financing through JPMorgan Chase & Co. and that all of its 395 stores, which are located in eight states in the eastern U.S., are fully stocked and open for business.
Customer loyalty programs and other promotions will keep operating, the company said.
The Montvale, N.J., company says that it determined that it could not complete its turnaround plan without filing for bankruptcy protection. It blamed heavy debt, the costs of a work force that is 95 percent unionized, and tough competition that has sent customers to competitors such as discount superstores and warehouse clubs for its difficulties.
A&P listed about $2.5 billion in assets and $3.2 billion in liabilities in its bankruptcy filing. A hearing to approve the debtor-in-possession financing, which will allow the company to keep paying its employees and vendors, is set for Monday.
The filing was widely anticipated. The company's stock price fell more than 67 percent on Friday, and trading was halted in the afternoon. Shares have traded between 86 cents and $13 in the past 52 weeks.
The company owns A&P, Waldbaum's, The Food Emporium, Super Fresh, Pathmark and Food Basics grocery stores.
A&P is one of the oldest supermarket operators in the country. Its first store was in New York City and sold tea, coffee and spices. It expanded across the nation and by the 1930s was the largest grocer in the country.
After more of a decade of decline, the Hartford family that owned the business sold the majority of it in 1979 to Germany's Tengelmann Group. Tengelmann remains one of its largest shareholders. Activist investor Ron Burkle of the Yucaipa Cos. investment firm is also a significant stockholder in the company.
A&P has struggled for several years with weak sales and heavy debt. It reported in its last quarter that it doubled its loss as revenue continued to fall. The company was reportedly in talks with advisory firms in October on how to best deal with its debt burden.
A&P has brought in new management, closed several stores, cut jobs and announced in November that it would sell six Pathmark stores for $89.8 million. However, the company launched its turnaround effort in the midst of a struggling economy as consumers cut spending and competition in the industry stiffened, and it has failed to yield results.
Competition is tough among grocers because many shoppers have limited their spending to essentials such as food. As a result, big retailers like Wal-Mart Stores Inc. and Target Corp. have increased their emphasis on food, creating a tougher environment for supermarkets. That is coupled with pressure from shoppers for the best deals, which leads many companies to lower prices to compete, lowering the already tight margins of the traditional grocer.
