January 22, 2018 / 6:23 PM / 6 months ago

U.S. grocer Tops taps Evercore for debt restructuring advice: sources

(Reuters) - U.S. grocer Tops Markets LLC has tapped investment bank Evercore Inc (EVR.N) for advice on how to tackle its debt load, people familiar with the matter said on Monday, in the latest sign of financial distress facing some food retailers.

The grocer has struggled because of its modest size and limited store footprint, according to credit rating agency Moody’s Investors Service Inc. The company’s debt load totaled $723 million as of last April.

Tops is examining a range of options to handle its debt, the sources said, asking not to be identified because the deliberations are confidential.

Tops did not respond to a request for comment. Evercore declined to comment.

The chain has more than 15,000 employees at its stores in New York, Pennsylvania, Vermont and Massachusetts.

The retailer’s management acquired Tops from Morgan Stanley’s (MS.N) private equity arm in 2013, which had in turn bought it from food retailer Koninklijke Ahold NV (AD.AS) in 2007.

In addition to its debt, Tops has significant pension liabilities. The grocer could owe as much as $184 million stemming from a 2013 acquisition of a logistics firm that operates its warehouses in upstate New York, according to regulatory filings. In the past 10 years, Tops’ footprint more than doubled, to its current 170 stores from about 70 in 2007.

Last year, the grocer completed a debt swap with creditors that extended the maturity on some of its borrowings by three years. That swap still requires that the grocer make payments this year and in the two following years, taking up a significant part of the company’s cash, Standard and Poors’ Inc said in a research note last August.

Amazon.com Inc’s (AMZN.O) acquisition of Whole Foods Market last year is expected to add to the distress facing food retailers because the e-commerce giant has lowered prices at the upscale grocer. Whole Foods overlaps with Tops in some cities in upstate New York.

Reporting by Jessica DiNapoli and Andrew Berlin in New York; Editing by Tom Brown

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