S&P rates Duane Reade notes B-, CCC

Standard & Poor's said it assigned B- issue and 4 recovery ratings to Duane Reade Inc.'s proposed $215 million senior secured notes due 2015 with 4 recovery rating and CCC issue and 6 recovery ratings to its proposed $110 million subordinated notes due 2016 with 6 recovery rating.

The CC corporate credit rating remains unchanged.

The outlook is negative.

Proceeds will be used to fund the tender offer for the company's $210 million senior secured notes due 2010 and $195 million subordinated notes due 2011.

"The CC corporate credit rating reflects our view of Duane Reade's recent discounted offer ($875 for each $1,000 principal amount) for the $195 million subordinated notes as a distressed exchange and tantamount to a default," S&P analyst Ana Lai said in a statement.

S&P said that ratings are based on the expectation that it will raise the corporate credit rating to B- if the tender offers and new debt transactions are completed.

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