Moody's Puts A&P, Pathmark Under Rating Review

NEW YORK -- Moody‘s Investors Service here on Tuesday said it has placed its long-term ratings of A&P and Pathmark under review following the retailers‘ announcement of a merger agreement. In a press release, Moody‘s said ratings for A&P were under review for a possible downgrade, noting that the $1.3 billion Pathmark deal “could result in a more highly leveraged entity with modest profitability that operates in highly competitive trade areas.” Moody‘s said its review would focus on several factors, including the capital structure of the new company and A&P‘s operating performance prior to closing the deal, expected late this year. In a separate announcement, Moody‘s said Pathmark‘s ratings were under review “with direction uncertain,” noting the possibility Pathmark‘s ratings could improve in the new arrangement, but that the retailer‘s operating performance could deteriorate in the period leading up to the deal closing. Moody‘s currently has a corporate family rating of B3 (high risk) on A&P, and of Caa1 (very high risk) on Pathmark. -- Jon Springer