TCR_Public/950612.MBX


BANKRUPTCY CREDITORS' SERVICE, INC.





        (MOODYS) Moody's Addresses Credit Quality of Orange Co., CA,
        Refunding Recovery Bonds
   

      

     NEW YORK, New York--June 12, 1995--Orange
County
,
        California, plans to sell $295 million Refunding Recovery Bonds
        tomorrow, June 13.  Moody's will rate the bonds Aaa based upon an
        insurance policy provided by MBIA, although aspects of the insured
        transaction warrant further discussion.  In addition, Moody's is
        providing comment on the underlying credit quality of the bonds.
        The bonds represent one component of the county's attempted recovery
        plan and, as such, have a bearing on the outcome of this
        unprecedented bankruptcy.  Moody's continues to watch these
        developments closely, and we will continue to comment on all
        financings, whether credit enhanced or not, for the implications on
        the county and more broadly on the public finance market.   
        


         Aaa Rating Based on MBIA Claims Paying Ability and Commitment
   

       
       

     The Refunding Recovery Bonds will be used to partly compensate
        for losses to participants in the Orange County Investment Pool.
        The county's deadline for meeting that obligation is June 16.  The
        Superior Court of California entered its default judgment on
        validation proceedings for the bonds on Monday, June 5, that the
        bonds are valid obligations issued in accordance with state law.
        The county presently plans to deliver the bonds on June 16 in
        accordance with its deadline to participants.  This transaction is
        fully insured, and we have received assurance from MBIA that the
        policy covers the validity of the underlying bond obligation.   
        


         Underlying Credit Quality Linked to Well-Below Investment Grade
        Debt Outstanding
   

      
          
       

     The Refunding Recovery Bonds must be examined in the context of
        the county's bankruptcy and present state of distress.  As we have
        stated previously, any new debt obligation of the county would have
        to be financially and legally insulated from the county to have
        credit quality above the county's current long term debt rating of
        Caa.  Under the current circumstances, the credit quality of the
        Refunding Recovery Bonds, absent the insurance, would be
        substantially below investment grade for reasons outlined below.
        The bonds present appropriate elements of protection, but there is a
        presumption that current problems will be solved: either the sales
        tax will be approved by voters, or the county will have sufficient
        budget flexibility in the future, notwithstanding legal pressure and
        uncertainity of access to the markets for cash flow.  In fact,
        events to date point in the opposite direction and include the
        county's threat of debt repudiation.   
        


         Legal Structure Uses Bankruptcy Tools and State Intercept
         The bond indenture provides five levels of security:
         (1) The bonds have a general obligation pledge, payable from all
        lawfully available  funds. The county cannot raise taxes to pay debt
        service. (2) Debt service has a super administrative priority claim
        under Section 364(c)(1) of the Bankruptcy Code. This claim would
        expire when the county emerges from bankruptcy. (3) Under Section
        364(c)(2) of the Bankruptcy Code, debt service has a priority lien
        over the interests of other general creditors, including existing
        debt holders. (4) In addition, the county has pledged to the payment
        of the bonds the Motor Vehicle License Fees collected by the state
        and distributed by formula to cities and counties. (5) The county
        has elected in the indenture to have the state intercept the Motor
        Vehicle License Fees and provide them directly to the trustee for
        payment on the bonds. This mechanism results from legislation (SB-8)
        recently enacted by the state to assist Orange County.
   

      
       

  Limitations on Security
         


            The indenture provides an enhanced degree of security to
        bondholders.  However, its value is limited.  First, Chapter 9
        bankruptcy is intended to enable the municipal entity to continue
        operations while addressing its claims.  The superpriority lien and
        senior claims granted to the bonds are thus subordinate to the
        county's operating costs, particularly its obligations to meet the
        health, safety and welfare needs of its residents.  The bankruptcy
        court cannot interfere with the exercise of these police powers.
        Further, the county has specifically made the superpriority lien
        junior to payment of the county's attorneys and consultants.   
   

      
       

     The pledge of the Motor Vehicle License Fees to the bonds
        dedicates a revenue stream that averages $90 million per year to the
        repayment of the bonds.  The intercept recently approved by the
        legislature provides a mechanism that potentially removes the county
        from the flow of funds to the bondholders; however, the intercept as
        enacted in SB-8 does not protect bondholders against future
        bankruptcy.  Further, the state is not limited in its ability to
        alter the funding formula and divert revenues from the county.   
        


            Given the potentially competing interests of the debt service
        and the county's operational obligations, these security features
        must be examined in the context of the county's ability to afford
        the debt.  Orange County's discretionary general fund budget for
        fiscal 1996 is 40% lower than the 1995 budget with a 16% decrease in
        staff planned, yielding reduced services throughout the county.
        These cuts are untested, and could impair the county's ability to
        meet the fundamental health, safety and welfare obligations to its
        constituents.  Difficulty meeting these operational requirements
        could result in litigation that might interrupt the flow of funds
        for debt service on these bonds.   
   

      
       

     Even if the county is successful with its budget cuts, they
        remain inadequate to meet all obligations.  Without the 1/2 cent
        increase in the sales tax, which voters will consider on June 27,
        the county does not have a viable plan to repay all its debt.  The
        sales tax continues to receive no support from the Board of
        Supervisors, and passage is far from certain.   
        


            The lack of effort by the county in paying the Recovery Bonds is
        most evident in the debt's structure.  The up front cost of the debt
        is minimal The county will pay interest only for the next five
        years, and only begin principal amortization in the sixth year.
        Teeter bonds will be issued shortly to refund outstanding notes and
        provide revenues to the county.  These revenues result is a zero net
        cost for the Recovery Bonds in 1996.   
   

      
       

  Credit Quality Reflects Ability and Effort
         


            While the Refunding Recovery Bonds are separately secured from
        the county's other obligations now rated Caa or SG (Speculative
        Grade), they are not insulated financially and legally from the
        county.  Their credit quality remains entwined with the county's
        other obligations.  We cannot review the credit quality of one
        obligation in isolation while the county is approaching default on
        other obligations.   
   

      
       

     The county has proposed an extension with holders of other notes
        due this summer, while retaining its rights to invalidate certain of
        these obligations.  The county also continues to use reserve funds
        to make payments on its certificates of participation and, again,
        has retained the right to seek to invalidate of these obligations.
        The sales tax that could make the county's recovery plan achievable
        may lack the support needed for a successful vote.  Without an
        intensive effort by the county to address its revenue requirements
        and honor all of its debt obligations, the credit quality on the
        Refunding Recovery Bonds, absent credit enhancement, is consistent
        with the county's other obligations, which are well below investment
        grade.   
        



        CONTACT:  Mary Francoeur
                  Assistant Vice President
                  212/553-7240
                  or
                  Karen S. Krop
                  Assistant Vice President
                  212/553-4860
                  or
                  Barbara Flickinger
                  Vice President and Assistant Director
                  Manager, Far West Regional Ratings
                  212/553-7736
                  or
                  Katherine McManus
                  Vice President and Assistant Director Manager,  
                  Legal Analysis Group
                  212/553-4036





        (OCTA-BUDGET) OCTA approves $602 million budget for FY 95-96; $1
        million a day pumped into local economy
   

      
       

     ORANGE, Calif.--June 12, 1995--The Orange
County
Transportation Authority (OCTA) board of directors Monday approved a
        $602 million budget that decreases staff, increases street and road
        and freeway investments, expands commuter rail service and maintains
        existing bus operations.
        


            The spending program presents a financially prudent plan for
        OCTA services and programs.  The budget continues to meet the
        mandates of Measure M in what has been a climate of economic
        adversity due to the County of Orange bankruptcy.
   

      
       

     The budget is for OCTA's new fiscal year which begins July 1. It
        includes the impact of last December's bankruptcy.  Despite the
        challenges, the OCTA budget is putting $1 million a day into the
        local economy.
        


            The new budget reflects the incorporation of new OCTA
        responsibilities, namely the addition of an OCTA Treasury Management
        Office and the implementation of strict investment policies and
        procedures.
   

      
       

     New efficiencies also were added to the budget proposal with
        changes to bus service for better customer service and to make the
        bus system operate more effectively.  The bus changes incorporate
        findings from a systemwide study and respond to a cut in federal
        operating dollars.
        


            A portion of OCTA's management information system also will be
        outsourced under the newly approved budget.
   

      
       

     "Next year's transportation services and programs will continue
        uninterrupted to serve Orange County residents at a high level but
        in a continued difficult economic environment," said OCTA Chairman
        Chuck Smith.  "OCTA also will pursue new private sector
        opportunities that benefit the agency," he added.
        


            Once again, a significant portion of the budget is comprised of
        projects approved and funded by Measure M, the county's half-cent
        transportation sales tax.  Non-Measure M spending includes marketing
        the redesigned bus system and completing a study to modernize the
        radio system used to track the Authority's buses.
   

      
       

     This year's budget is the fourth consolidated budget since OCTA
        was formed from a myriad of separate transportation agencies.  The
        new OCTA budget also is more than 70 percent outsourced by the
        Authority for construction, engineering design, professional
        services and contract transportation.

         
    

        The new budget reflects another reduction in the OCTA workforce.
        A staff of 1,512 will be in place, which is down from a staff of
        1,584.  The staffing reduction also reflects a lower budget for
        salary and benefits.  Since 1991, OCTA staffing has been reduced by
        approximately 15 percent.  A great number of these cuts have been
        administrative jobs.
       


         
        CONTACT:  Orange County Transportation Authority
                  Elaine Beno, 714/560-5571





  GRAND UNION ANNOUNCES 4TH QUARTER AND FISCAL 1995 RESULTS
   


   WAYNE, N.J.--June 12, 1995--The Grand Union Company,
   a regional retail food chain, announced that Operating Cash Flow
   (EBITDA) was $14.9 million, or 2.8% of sales, for the 12 weeks ended
   April 1, 1995, compared to $42.5 million, or 7.4% of sales, for the 12
   weeks ended April 2, 1994. EBITDA was $135.6 million, or 5.7% of sales
   for the 52 weeks ended April 1, 1995 ("Fiscal 1995"), compared to
   $180.1 million, or 7.3% of sales for the 52 weeks ended April 2, 1994
   ("Fiscal 1994").
   


   Grand Union filed a voluntary petition for protection under Chapter 11
   of the U.S. Bankruptcy Code on January 25, 1995. The company's Plan of
   Reorganization was confirmed by the U.S. Bankruptcy court on May 31,
   1995, and the company expects the effective date of the reorganization
   to be on or about June 15, 1995.
   


   EBITDA for the 12 weeks ended April 1, 1995, was significantly
   affected by reduced sales in existing units and, as in the third
   quarter, by declines in promotional allowances and other vendor
   support resulting from the company's restructuring. Additionally,
   EBITDA for both the 12 weeks ended April 1, 1995, and all of Fiscal
   1995 was affected by low investments in forward buy inventories and
   the costs associated with a promotional pricing program introduced in
   the second quarter in the company's Northern Region. EBITDA during
   Fiscal 1994 was reduced by an estimated $8.0 million as a result of a
   22-day work stoppage in May 1993.


   EBITDA is defined as earnings before LIFO provision, depreciation and
   amortization, provision for store closings, reorganization items,
   charges relating to pension settlement and early retirement programs,
   interest expense, income taxes and cumulative effect of accounting
   change.
   


   Sales for the 12 weeks ended April 1, 1995, were $524 million, an 8.5%
   decrease from sales of $573 million for the 12 weeks ended April 2,
   1994. Sales for Fiscal 1995 were $2.392 billion, a 3.5% decrease from
   sales of $2.477 billion in Fiscal 1994. The sales decline during the
   fourth quarter of Fiscal 1995 as compared to Fiscal 1994 primarily
   resulted from the closure or sale of 20 stores as a part of the
   company's restructuring, publicity surrounding the bankruptcy
   proceeding and the negative effect on sales of a milder winter this
   year, partially offset by increased sales from stores which were
   newly-built or renovated earlier this year. Sales comparisons are also
   affected by the timing of the Easter holiday shopping period which did
   not occur during the 12 weeks ended April 1, 1995, but did occur
   during the 12 weeks ended April 2, 1994.
   


   In addition to the above factors, the company experienced sales
   declines during all of Fiscal 1995 due to competitive store openings
   and weak economic conditions and an increased emphasis on
   value-oriented products in the Northern Region.
   


   Sales comparisons between Fiscal 1995 and Fiscal 1994 are also
   affected by the exclusion from Fiscal 1995 (and inclusion in Fiscal
   1994) of the holiday shopping period preceding Easter and the effect
   of the work stoppage experienced during the first quarter of Fiscal
   1994. Same store sales decreased 6.6% for the 12 weeks ended April 1,
   1995 and 4.8% for Fiscal 1995.
   


   Joseph J. McCaig, president and chief executive officer, said, "Fiscal
   1995 results reflect the challenge of approaching and then operating
   under Chapter 11. While the penalties we endured were significant, we
   concurrently identified and corrected Grand Union's major weaknesses,
   including the closure of 20 unprofitable stores. We are currently in
   the process of closing our Waterford, N.Y. Distribution Center and
   implementing an arrangement whereby our 127 Northern Region stores
   will be supplied by C&S Wholesale Grocers Inc., at significantly lower
   cost. We also repositioned our pricing structure in the Northern
   Region on May 1 to be much more competitive in that key market."
   


   "With the cooperation of our creditors," McCaig said, "we will emerge
   from bankruptcy with a much improved financial structure, enabling us
   to resume solid growth in the future."
   


   McCaig said the company currently has replacement stores under
   construction in Valatie, NY, and Morrisville, Vt., as well as an
   enlargement of an existing store in Darien, Conn. In the next few
   weeks, the company will commence construction of a new store in
   Tannersville, N.Y., and enlargements of existing stores in West Islip
   and Lake Placid, N.Y.
   


   The company's capital plan, McCaig said, calls for a total of 35 major
   projects, including six new and 11 replacement stores, six
   enlargements and 12 renovations over the next two years as well as the
   acceleration of capital spending on store systems.

    

   "Most importantly," McCaig said, "thanks to the dedicated efforts of
   our 17,000 associates during the last six months and the full support
   of our suppliers, we managed to protect the valuable customer
   franchise in the Northeast that our company has built over the last
   123 years."

    

   "With the leadership of Roger E. Stangeland, retired Chairman and
   Chief Executive Officer of The Vons Companies, Inc., as our Company's
   new Chairman of the Board," McCaig continued, "we look forward to
   seeing Grand Union achieve solid growth and success and an even
   stronger customer franchise."
   


   Grand Union currently operates 231 retail food stores in Connecticut,
   New Jersey, New Hampshire, New York, Pennsylvania and Vermont.



THE GRAND UNION HOLDINGS CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(in thousands of dollars)



52 Week Fiscal Year Ended  12 Week Quarter Ended

April 1,    April 2,      April 1,   April 2,

1995         1994         1995        1994



Sales               $2,391,696   $2,477,339   $ 524,060   $ 572,980

Gross profit           686,504      711,964     145,719     165,495

Operating and

administrative

expense              (550,913)    (531,839)   (130,807)   (123,024)



Earnings before LIFO

provision, depreciation

and amortization,

provision for store

closings, reorganization

items, charges relating

to pension settlement

and early retirement

programs, interest

expense, income taxes,

and cumulative effect of

accounting change

(EBITDA)              135,591      180,125       14,912     42,471



LIFO provision           1,110         (928)       1,860       (320)



Depreciation and

amortization          (87,098)     (78,577)     (19,874)   (19,208)



Provision for store

closings, net         (12,900)          --       (2,270)        --



Reorganization items   (10,770)          --       (8,888)        --



Charges relating to

pension settlement

and early retirement

programs               (3,747)      (4,468)      (3,747)    (4,468)



Earnings (loss) before

interest expense,

income taxes and

cumulative effect

of accounting change   22,186       96,152      (18,007)    18,475



Interest expense:

Debt:

Obligations requiring

current cash

interest            (124,372)    (128,661)     (19,789)   (30,445)

Obligations requiring

no current cash

interest             (33,317)     (35,354)      (2,163)    (8,603)

Capital lease

obligations          (19,226)     (14,951)      (4,719)    (3,996)

Amortization of

deferred financing

fees                  (5,101)      (4,831)      (1,187)    (1,140)



Loss before income

taxes and cumulative

effect of accounting

change               (159,830)     (87,645)     (45,865)   (25,709)





Income tax provision        --           --           --         --



Loss before cumulative

effect of accounting

change               (159,830)     (87,645)     (45,865)   (25,709)

Cumulative effect of

accounting change          --      (30,308)          --         --



Net loss              (159,830)    (117,953)     (45,865)   (25,709)



Accrued preferred

stock dividends

of Holding            (19,480)     (16,011)      (1,307)    (3,841)



Net loss applicable to

common stock of

Holdings            $(179,310)    $(133,964)  $ (47,172)  $(29,550)

    

   CONTACT: Grand Union Holdings Corp. | Donald C. Vaillancourt,
   201/890-6100