Industry analysts expect store closings
* Grocery business under intense pressure
* Bankruptcy to be used to overhaul business (Updates with approval of loan in third paragraph)
By Tom Hals
WILMINGTON, Del., Dec 13 (Reuters) - Grocery store chain A&P, which filed for bankruptcy on Sunday, may have to shutter a quarter or more of its stores if it hopes to survive, analysts say.
In bankruptcy, the company officially known as The Great Atlantic and Pacific Tea Co GAPTQ.PK will get a chance to perform radical surgery on itself as it faces growing pressure in the low-margin supermarket business.
The company received interim approval from a bankruptcy judge on Monday for an $800 million bankruptcy loan, which analysts said could give it 18 months for an overhaul.
"It's a tough workout," said Joe Stauff, who analyzes distressed companies for Susquehanna International Group.
Stauff said the company could close more than 100 of its 395 stores, which operate under the names of A&P, Waldbaum's, SuperFresh, Pathmark, Food Basics and The Food Emporium in the northeastern United States.
"As we said when we announced our turnaround plan in October, we continue to analyze our store portfolio and will do so in Chapter 11," A&P spokesman Eric Andrus said.
A&P rushed into bankruptcy as its cash was dwindling and a debt payment was looming this week. Unlike most big bankruptcies, the grocery chain does not have a prearranged plan for coming out of court protection.
The company has been squeezed by cut-rate operators of warehouse stores such as Costco Wholesale Corp (COST.O), as well as Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N), which have expanded into groceries. At the same time, wealthier shoppers have been lured away by higher-end stores such as Whole Foods Market Inc (WFMI.O).
Unable to pass along rising wholesale costs at the checkout, supermarkets have been forced to gain scale through size or by tightly controlling costs such as leases.
Several other regional supermarkets have gone through bankruptcy in recent years, including Bruno's, Bi-Lo, Penn Traffic Co and Bashas'.
BLUNDER AFTER BLUNDER?
Analysts expect A&P to take a hard look at its vendor contracts, leases and other operational costs, as well as its balance sheet and finances.
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