Moody's downgrades BI-LO

Moody's Investors Service said it downgraded BI-LO Holding Finance, LLC's corporate family rating to Ca from Caa1 and probability of default rating to D-PD from Ca-PD.

The agency also downgraded the rating on the company's senior unsecured payment-in-kind toggle notes to C from Ca.

BI-LO, LLC's senior secured notes were affirmed at Caa1.

The outlook was revised to stable.

The downgrades follow news that the company initiated a financial restructuring plan with the support of key stakeholders under which the company will file a pre-packaged plan of reorganization under Chapter 11 of the U.S Bankruptcy Code.

The agency said it views this as a strategic prepackaged bankruptcy filing in order to efficiently optimize the company's store base and address its pending debt maturities as part of a global restructuring.

The company has significant debt maturities in 2018 and 2019, but from an operating performance standpoint it has demonstrated improvement in EBITDA and credit metrics with a debt-to-EBITDA ratio currently at about 5.2x.

The pre-packaged Chapter 11 filing and the cancellation of the holding company's notes in exchange for equity will allow the company to emerge with a stronger balance sheet and sustainable debt levels, the agency explained.

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