Pathmark Stores, the U.S. supermarket chain headquartered in Carteret, N.J., is considering pulling the trigger on an interest-rate swap following a USD200 million bond offering it issued earlier this month. The offering was the first for the supermarket chain since it emerged from a Chapter 11 bankruptcy restructuring in 2000. The swap would be used to convert the 8.75% fixed-rate bond into a floating-rate liability. The swap would also have a 10-year maturity matching that of the bond offering. "We are always looking at opportunities, such as interest-rate swaps, that could improve our balance sheet," said Harvey Gutman, v.p. of investor relations. Gutman added that Pathmark has used swaps several times prior to its restructuring. He declined to name the counterparties on the company's prior deals or the firms in the running this time. Gutman declined to elaborate on Pathmark's past swaps.
The company plans to use the proceeds from the offering to pay down USD200 million of USD400 million in floating-rate loan from JPMorgan. Dresdner Kleinwort Wasserstein-Grantchester and Credit Suisse First Boston lead the offering. Pathmark's bonds are rated Ba3 by Moody's Investors Service and B by Standard & Poor's.
