S&P gives Dollar General loans B+, CCC+

Standard & Poor's said it revised certain of its ratings on Dollar General Corp. following the company's capital structure revision in conjunction with the financing of its LBO by Kohlberg Kravis Roberts & Co.

S&P said it took the following actions:

• Assigned a B+ rating to the revised $1.7 billion "first-out" term loan B. This rating, one notch above the corporate credit rating of B on Dollar General and the 2 recovery rating indicate our expectation for a substantial recovery in the event of payment default

• Assigned a CCC+ rating to the revised $600 million "first-loss" term loan B. This rating, two notches below the company's corporate credit rating and the 6 recovery rating indicate our expectation for a negligible recovery in the event of payment default.

• Affirmed all other ratings.

The outlook remains negative.

The agency noted that the ratings on Dollar General reflect its very highly leveraged capital structure, recent execution difficulties that have resulted in falling operating margins and the company's participation in the highly competitive discount retail environment.

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