Moody's lowers A&P ratings

Moody's Investors Service said it downgraded all ratings of The Great Atlantic & Pacific Tea Co. Inc., including the bank loan to B2 from Ba3, the three senior note issues to Caa1 from B3, and the speculative grade liquidity rating to SGL-3 from SGL-2.

More specifically, Moody's downgraded the company's $400 million revolving credit facility to B2 from Ba3, $220 million 7.75% senior notes due 2007 to Caa1 from B3, $217 million 9.125% senior notes due 2011 to Caa1 from B3, $200 million 9.375% senior notes due 2039 to Caa1 from B3, preferred trust securities issued by A&P Finance I, A&P Finance II, and A&P Finance III to prospective Caa2 from prospective Caa1, speculative grade liquidity rating to SGL-3 from SGL-2, senior implied rating to B3 from B2, and the long-term issuer rating to Caa1 from B3.

Moody's said the downgrade is prompted by A&P's high cash burn rate and the demonstrated inability to tangibly improve weak operations.

Benefiting the ratings are Moody's opinion that cash balances largely will finance free cash flow deficits over the next four quarters and A&P's important positions in its core markets around New York City and Toronto.

The outlook continues to be negative.

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