S&P: A&P, Pathmark on developing watch

Standard & Poor's said it revised the CreditWatch implications for both Great Atlantic & Pacific Tea Co. Inc. (A&P) and Pathmark Stores Inc. to developing from negative.

Although a definitive capital structure has yet to be determined if Pathmark is successfully acquired by A&P, the agency said it now believes that there is potential for ratings to be raised from the current B- levels.

Factors that could lead to a higher rating include the use of proceeds from asset sales to finance the Pathmark transaction as A&P has already announced that it is in the process of negotiating the potential sale of its 66 Farmer Jack stores.

However, ratings could be lowered if the pro forma capital structure is highly leveraged, resulting in limited liquidity and flexibility for the company to reinvest in its operations, the agency noted.

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