Pathmark Stores Inc and The Yucaipa Companies LLC jointly announced a definitive agreement under which Yucaipa will invest $150 million in Pathmark. Proceeds from the transaction will be used to upgrade Pathmark's store base and open more stores. Yucaipa, a Los Angeles CA-based private equity firm, has also executed a five-year agreement with Pathmark to provide consulting services on corporate strategy, marketing, operations, finance, and retail development.
Under terms of the agreement, Yucaipa will purchase 20,000,000 newly issued shares of Pathmark common stock, 10,060,000 Series A warrants, and 15,046,350 Series B warrants. The shares will represent about 40% of Pathmark's outstanding common stock. Upon closing, Pathmark's board of directors will consist of six current or new independent directors and five more directors nominated by Yucaipa. Independent directors will have the right to nominate their successors.
This transaction, which was unanimously approved by Pathmark's board of directors, is subject to customary closing conditions and approval by Pathmark stockholders. The transaction is expected to close in summer 2005.
