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S&P could upgrade Supervalu following sale

NEW YORK (AP) -- Standard & Poor's Ratings Services said Monday it may upgrade Supervalu Inc.'s credit rating based on the supermarket operator's decision to sell off five of its grocery chains.

Analyst Ana Lai placed Supervalu's credit ratings on review for a possible upgrade, saying the sale will bring a small reduction in the company's debt and improve its profitability, and might make a significant dent in its lease commitments and liabilities. She added that the company is selling many of its struggling retail assets.

Lai rates Supervalu's credit at 'B'. That is "junk" status, five notches below investment grade.

On Thursday, Supervalu agreed to sell the Albertson's, Jewel-Osco, Acme, Shaw's, and Star Market chains to an investor group led by Cerberus Capital Management. The transaction includes $100 million in cash for the stores and the assumption of $3.2 billion in existing debt. The five grocery chains run a total of 877 stores. The investment group already owns about 200 Albertson's in the South and Southwest.

Supervalu is based in Eden Prairie, Minn. After the sale it will focus on its Save-A-Lot discount stores, as well as its smaller regional chains Cub, Farm Fresh, Shoppers, Shop 'n Save and Hornbacher's.

Shares of Supervalu were closed unchanged at $3.53 on Monday. The stock has traded between $1.68 and $7.30 in the last year.