The Penn Traffic Co's plan of reorganization took effect April 13, and the company has formally emerged from Chapter 11 under the Bankruptcy Code. As previously announced, the United States Bankruptcy Court for the Southern District of New York confirmed the company’s plan March 17, 2005.
In connection with its emergence from Chapter 11, Penn Traffic closed on two exit financing facilities consisting of a term and revolving facility of up to $136 million principal amount and a supplemental real estate facility of up to $28 million principal amount, as well as a sale-leaseback transaction pursuant to which Penn Traffic sold its five owned distribution centers in New York and Pennsylvania to Equity Industrial Partners Corp for $37 million. Equity Industrial will lease the distribution centers back to Penn Traffic for an initial term of 15 years, with four consecutive five-year options to renew the lease.
Robert Chapman, president and chief executive officer of Penn Traffic, said, “Penn Traffic is beginning life as a new company with a solid capital structure, greatly reduced debt, disciplined and improved operations, and a strengthened management team. Penn Traffic today is a leaner, strong competitor with bright prospects."