Moody's upgrades Rite Aid ratings

Moody's Investors Service upgraded the bank loan and unsecured notes of Rite Aid Inc. to Ba3 and Caa1, respectively, confirmed the second-lien senior secured notes at B2, confirmed the speculative grade liquidity rating at SGL-2, and maintained its stable rating outlook.

Upgraded are the company's $1.85 billion first-lien secured bank facility to Ba3 from B1; the $1.51 billion of senior notes (comprised of nine separate issues) to Caa1 from Caa2; the $250 million of 4.75% convertible notes due 2006 to Caa1 from Caa2; and the unsecured issuer rating to Caa1 from Caa2.

Moody's said limiting the ratings are the company's highly leveraged financial condition, weak performance relative to its higher rated peers, and current inability to internally fund the necessary capital investment program.

However, Moody's said its expectation that management will consistently continue to achieve the revenue and cash flow objectives required to turn around the company's performance and the initial success of efforts to implement an appropriate long-term capital structure benefit the ratings.

While Moody's said it anticipates that the company will continue using all available cash flow to repurchase public debt and to make investments in its store base, the speculative grade liquidity rating recognizes the liquidity cushion provided by $595 million of revolving credit facility availability plus $274 million in cash.

© 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.