Redeemable Preferred Stock

3 Months Ended

Jun. 18, 2011

Redeemable Preferred Stock

Redeemable Preferred Stock

10.  Redeemable Preferred Stock

On August 4, 2009, our Company issued 60,000 shares of 8.0% Cumulative Convertible Preferred Stock, Series A-T, without par value, to affiliates of Tengelmann Warenhandelsgesellschaft KG ("Tengelmann") and 115,000 shares of 8.0% Cumulative Convertible Preferred Stock, Series A-Y, without par value, to affiliates of Yucaipa Companies LLC ("Yucaipa"), together referred to as the "Preferred Stock," for approximately $162.8 million, after deducting approximately $12.2 million in closing and issuance costs. Each share of the Preferred Stock has an initial liquidation preference of one thousand dollars, subject to adjustment.

The Preferred Stock issuance was classified within temporary stockholders' equity in our Consolidated Balance Sheets as of June 18, 2011 and February 26, 2011.  The holders of the Preferred Stock are entitled under a pre-bankruptcy agreement to an 8.0% dividend, payable quarterly in arrears in cash or in additional shares of Preferred Stock if our Company does not meet the liquidity levels required to pay the dividends.  However, no dividends have been paid during the pendency of our bankruptcy case.

On November 24, 2010 our Company's Board of Directors authorized a payment-in-kind ("PIK") dividend on our Preferred Stock, payable on December 15, 2010 to holders of record on November 15, 2010 ("Record Date"). Dividends are required to be PIK in the event our Company does not have the ability to pay the dividends in cash. As of the Record Date, we did not have the ability to pay the dividends in cash. The calculation of PIK dividends on our Preferred Stock is based upon the rate defined by the original terms of the Preferred Stock at 9.5% per annum. The PIK dividends of approximately $4.0 million are included in "Series A Redeemable Preferred Stock" in our Consolidated Balance Sheets.

Deferred financing fees amortization and embedded beneficial conversion features accretion for the 16 weeks ended June 18, 2011 and June 19, 2010 was $0.5 million and $1.5 million, respectively, during each period. During the 16 weeks ended June 19, 2010, we accrued Preferred Stock dividends of $4.3 million, within "Additional paid-in capital" and paid Preferred Stock cash dividends of $7.0 million.