Moody's may downgrade Dollar General

Moody's Investors Service said it placed Dollar General Corp.'s Ba1 corporate family and probability-of-default ratings and Ba2 (LGD4, 66%) senior unsecured note rating on review for possible downgrade following the company's announcement that it signed a definitive agreement to be acquired by affiliates of Kohlberg Kravis Roberts &. Co. The transaction is valued at $7.3 billion, including the assumption of $380 million of net debt, and Dollar General shareholders will receive $22 per share in cash.

The agency said the review was prompted by the high likelihood that the transaction with be predominantly financed with debt and will result in a significant increase in the company's leverage and a corresponding weakening in credit metrics at a time when the company's operating performance has been weak.

The review will focus on the company's capital structure post transaction; its financial profile pro forma for the transaction, including its liquidity; the company's ability to manage its expected higher debt burden at a time when operating performance continues to be soft; and, the company's ongoing efforts to improve its operating margins, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.