FoodONE Warned Food Industry Clients of A&P’s Financial Insecurity 14 Months before Grocer’s High-Profile Bankruptcy

Spot-on financial analysis by FoodONE, together with One Source receivable protection advice, saved clients millions in potential losses

PORTLAND, Maine (December 16, 2010) – Analysts at FoodONE, a division of Seafax, Inc., the leading provider of food-related business information in North America, rated A&P “high risk” in October 2009 – 14 months before the nation’s oldest grocer filed for Chapter 11 bankruptcy protection.

The early warning put Maine-based FoodONE’s (www.foodonereports.com) clients on notice and, together with receivable protection advice from subsidiary One Source Risk Management and Funding, saved clients millions in potential losses as unsecured creditors in bankruptcy proceedings, Seafax officials said Thursday.

“A&P was on our short internal watch list for a potential bankruptcy filing since the change to High Risk in the fall of 2009,” said Beth Gideon, VP, Credit and Special Investigations at Seafax. “We scrutinized and evaluated all financial releases from A&P over the last several years and were able to accurately warn our clients of the risks and also offer them the protection they needed.”

The Great Atlantic & Pacific Tea, Co., better known as A&P, filed for Chapter 11 bankruptcy protection on Dec. 12. The 151-year-old company, which owns A&P, Pathmark, Super Fresh and other grocery stores, listed total debts at $3.2 billion and assets at $2.5 billion.

FoodONE monitors food-related buyers, helping business clients manage risk and maximize market opportunities. The firm publishes an hourly news wire of the latest food industry news and provides in-depth financial and company-specific credit information to thousands of credit professionals.

Prior to moving A&P’s credit appraisal status to High Risk in 2009, FoodONE had listed the once-dominant food grocer on Cautionary Status since 2003, Gideon said. Such an appraisal is applied to entities that have known warning signals or issues that may affect the company's level of creditworthiness.

“These issues - or warning signals - revealed concerns about the company's willingness and/or ability to honor its obligations,” Gideon said. “Characteristics may include concentration of credit risk, change of business focus, seasonality of the business, increased trade slowness, a change in banking status and/or relationship and financial condition.”

FoodONE had regularly monitored A&P and released pivotal news and information on the grocer through its First News daily wire and its enhanced business reports. In addition, the company’s quarterly FoodONE Report warned the food industry about A&P after the release of dismal quarterly financial results, as well as with the confirmation of asset sales and other turnaround efforts made prior to the Chapter 11 filing on December 12.

In filing for bankruptcy protection, A&P pointed to enormous debt, falling sales and rising competition from low-priced peers. Founded in 1859, A&P was the largest food retailer in the U.S. in the early 1930s with more than 16,000 stores in 39 states. The company dominated the grocery industry until the early 1970s. Today, the company operates 395 stores in eight states.

Many clients who heeded FoodONE’s warnings via its news services and food industry credit reports will suffer minimal or no loss as a result of A&P’s bankruptcy by obtaining payment protection through One Source (www.onesourcerm.com), a Seafax subsidiary responsible for receivable protection products.
Most unsecured suppliers of A&P were not aware of reasonable cost solutions to transfer the credit risk of A&P. One Source helped numerous clients avoid the financial impact of this week’s bankruptcy by mitigating or eliminating the credit exposure through non-cancelable credit insurance and put options.

For example, one Southern firm is protected for more than $1 million in trade debt through its program placed by One Source, according to George Babeu, President at One Source.

“It’s a growing trend to be protected and hedge against losses when doing business in today’s economy,” Babeu said. “And our clients are thanking themselves for purchasing receivables protection. We help companies in the food industry make informed decisions by providing them with up-to-the-minute and in-depth analysis – information they need to conduct business wisely and the ability to protect those decisions when things turn bad.”

According to published reports, A&P’s top unsecured creditors include McKesson Drug Co. ($15.1 million in trade debt); Haddon House Food Products ($10.6 million); Coca-Cola Enterprises Inc. ($7.1 million); Frito-Lay Inc. ($4.5 million) and Nabisco Biscuit Co. ($4 million). Unsecured creditors are generally the last in line to receive payment through the bankruptcy process.

“Through One Source, we provide clients with the protection they need to feel comfortable if they do jump in or continue a business relationship with a company in a precarious situation, such as A&P,” he added. “Often times, companies cannot simply turn off a relationship. Either way, our clients are informed and protected, which is key.”

About FoodONE
FoodONE is a division of Seafax (www.seafax.com), established in 1985 and widely recognized as the leading provider of food-related business information in North America. By providing far reaching and in-depth financial and company-specific information, FoodONE enables clients to manage risk and maximize market opportunities.

FoodONE (www.foodonereports.com) has extended its credit information service network to a diverse range of food-related businesses, including meat, poultry, dairy, cheese, seafood and general food. FoodONE members also receive unparalleled collections, special investigations, and credit consulting services.

FoodONE is headquartered in Portland, Maine with regional offices nationwide in New York, Tampa, Houston, Long Beach, Calif., and Seattle. The firm employs a staff of more than 65 professionals serving more than 1,200 businesses in the food industry.

About One Source Risk Management and Funding
One Source Risk Management and Funding, a subsidiary of Seafax, Inc., offers a wide array of credit risk insurance and financial products to protect and increase business profits. An independent broker based in Portland, Maine, One Source specializes in identifying the best credit risk management and funding options available to its clients. For additional information, contact One Source toll free at 866.463.4741 or visit www.onesourcerm.com.

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