The ratings on Toronto-based George Weston Ltd. largely reflect what Standard&Poor's Ratings Services views as the company's strong market position in food distribution through its 62% owned subsidiary Loblaw Companies Ltd. (BBB/Negative/--) and the financial flexibility afforded by its substantial cash balances and liquid Loblaw holdings. We believe these factors are partially offset by weaknesses in Loblaw's operating infrastructure and challenging market conditions leading to weak profitability. Also offsetting the strengths in our view is the uncertainty surrounding the redeployment of funds from the sale of the U.S. fresh bakery business. While the ratings on George Weston and Loblaw are currently the same, the rating relationship between the two remains one of linkage, not equalization, with each rating
