A&P says it may sell Canadian division

The Great Atlantic and Pacific Tea Company, owner of the A.& P. supermarket chain, said yesterday that it might sell its Canadian unit.

The company also said it would sell or close its roughly 100 Farmer Jack and Food Basics stores and support centers in Michigan and Ohio.

Selling its profitable Canadian unit would improve Great Atlantic's balance sheet, permitting it to focus on its 250 stores in the New York region and its 75 stores in the Middle Atlantic States. Great Atlantic has lost money for seven consecutive quarters.

"A.& P. has a billion dollars of debt outstanding, and the sale of their Canadian operations will provide enough to retire a large part of their outstanding debt," said Sean Egan, managing director at the Egan-Jones Ratings Company in Haverford, Pa. Egan-Jones raised Great Atlantic's debt rating yesterday to B- from CCC.

Shares of Great Atlantic, which is based in Montvale, N.J., rose $4.28 yesterday, to $22.55. The shares have almost tripled in the last year.

"Food retail valuations in Canada are higher; their Canadian business is doing well; so, it's a good time to sell," Karim Salamatian, an analyst at BMO Nesbitt Burns in Toronto, said.

Potential buyers include Sobeys Inc. of Stellarton, Nova Scotia, and Metro Inc. of Montreal, although private equity firms could also make a bid, Mr. Salamatian said.

Also yesterday, Great Atlantic reported that its fiscal fourth-quarter loss narrowed to $5.71 million, or 15 cents a share, from $59.9 million, or $1.56, a year earlier as it cut costs and sold more private-label products. Sales in the period ended Feb. 26 fell 5.9 percent, to $2.56 billion, from $2.72 billion.

The company said sales at stores open at least a year were unchanged in the quarter. They fell 0.5 percent in the United States and rose 1.2 percent in Canada.

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