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Moody's cuts Pathmark
Moody's Investors Service said it downgraded all ratings of Pathmark Stores Inc. and assigned a stable outlook.
Moody's downgraded Pathmark's $350 million 8¾% senior subordinated notes due 2012 to B3 from B2, senior implied rating to B1 from Ba3 and unsecured issuer rating to B2 from B1.
Moody's said the downgrade was prompted by the increasing intensity of grocery retailing competition in the company's trade area and the expectation that stabilizing revenue and operating profit will prove challenging.
Constraining the ratings are Moody's belief that the company will run free cash flow deficits over the intermediate term, the company's highly leveraged financial condition and the pressures on already low margins in the highly competitive supermarket industry.
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