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Pathmark Stockholders Approve Yucaipa Investment

Yucaipa’s $150 million investment will enhance Pathmark’s growth opportunities.Supermarket chain Pathmark Stores (Nasdaq:PTMK) announced Thursday afternoon that its stockholders have approved The Yucaipa Companies’ $150 million investment in Pathmark at a special meeting of stockholders held in Pathmark’s Carteret office. Of the 21.9 million shares voted, over 83% voted in favor of the proposal. The transaction is expected to close shortly. Pathmark will use the proceeds from the transaction to upgrade its existing store base and open additional stores, positioning the company for improved top line growth and profitability. Yucaipa has also executed a five-year management agreement with Pathmark to provide consulting services following the closing on corporate strategy, marketing, operations, finance and retail development.

Eileen Scott, CEO of Pathmark said, “With the new investment and Yucaipa’s industry expertise, Pathmark will be in a strong position to pursue opportunities to create meaningful value for stockholders and better serve our customers.”

Under the terms of the agreement announced on March 24, 2005, The Yucaipa Companies, a Los Angeles based private-equity firm, will purchase from Pathmark 20,000,000 newly issued shares of the company’s common stock, Series A warrants to purchase 10,060,000 shares of the company’s common stock and Series B warrants to purchase 15,046,350 shares of the company’s common stock for an aggregate purchase price of $150 million in cash. The 20,000,000 shares will represent approximately 40% of Pathmark’s outstanding common stock. The Series A warrants have an exercise price of $8.50 per share and a three-year term and the Series B warrants have an exercise price of $15.00 per share and a 10-year term.

At the close of trading, Pathmark shares were up $0.26 to $8.86.

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