Citi Comments On Great Atlantic & Pacific Tea's Potential Bankruptcy

There was speculation in the press today surrounding Great Atlantic & Pacific Tea Co. GAP filing to reorganize under court protection as soon as this weekend. According to a Bloomberg article, A&P hired law firm Kirkland & Ellis LLP to represent it in negotiations with creditors and in any Chapter 11 proceeding. The grocery landscape continues to be very competitive, which has made it difficult for higher- priced GAP banners to compete. This coupled with GAP's higher cost structure and debt leverage has led to significant EBITDA deterioration. Citi has noted in the past that this increases our concerns about management's ability to reverse these trends. Citi is currently waiting for more details from management. GAP closed Friday down 67% to $0.93