S&P rates A&P notes B-

Standard & Poor's said it assigned a rating of B- to the Great Atlantic & Pacific Tea Co. Inc.'s (B-/stable) proposed $225 million of second-lien notes due 2015 with 4 recovery rating and a CCC- rating to its proposed $175 million of preferred stock with 6 recovery rating.

The corporate credit rating is B-.

The outlook is stable.

Ratings reflect the company's highly leveraged capital structure, meaningful multiemployer pension liability, limited free cash flow generation, geographic concentration in the New York and New Jersey metropolitan area, its participation in the highly competitive supermarket industry and recent weaker-than-expected supermarket performance, the agency said.

Pro forma for the proposed convertible preferred stock and second-lien note issuance, A&P's adjusted debt-to-EBITDA ratio is 7.6x compared with an actual 7x as of Feb. 28.

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