S&P rates CSK Auto notes B+

Standard & Poor's said it assigned a B+ rating to CSK Auto Inc.'s $85 million 4.625% senior exchangeable notes due 2025 and $125 million 3.375% senior exchangeable notes due 2025. The B+ corporate credit and B- subordinated note ratings were affirmed.

The outlook remains stable.

Proceeds from the $85 million note offering and additional borrowings under its credit facility will be used to fund the acquisition of Murray's Discount Auto for $170 million. While credit metrics pro forma for the acquisition will be weak for current ratings, S&P said it anticipates that they will improve over the next year as CSK uses its free cash flow to pay down debt.

Lease-adjusted debt to EBITDA is anticipated to increase to the low-6x area pro forma for the transaction from 5.7x at Oct. 30. Current weak credit metrics are partially offset by the company's business profile and its position as the third-largest auto part retailer in the United States, the agency said.

The ratings on CSK Auto reflect the company's participation in the highly competitive auto parts aftermarket retail sector, weak cash flow protection measures and high leverage.

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