Moody's may upgrade A&P

Moody's Investors Service said it placed the ratings of The Great Atlantic & Pacific Tea Co., Inc. (A&P) on review for possible upgrade following the announcement that its subsidiary, A&P Luxembourg Sarl, had entered into an agreement to sell A&P Canada for total consideration of $1.475 billion.

Moody's said the review for possible upgrade reflects the anticipated significant increase in cash and material reduction in debt when the transaction is completed around mid-August.

The proposed sale of A&P Canada is one of a number of strategic initiatives that the company has undertaken to boost profitability, strengthen the capital structure and fund more aggressive capital expenditures, the agency added.

Affected ratings include the B3 corporate family rating, senior secured and guaranteed bank agreement at B2 and senior unsecured notes at Caa1.

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