S&P keeps Jean Coutu on positive watch

Standard & Poor's said that the ratings on Jean Coutu Group (PJC) Inc. (B+/Watch positive) remain on CreditWatch with positive implications, where they were placed Aug. 24, 2006.

The ratings on Jean Coutu's subordinated notes remain on CreditWatch with developing implications, the agency said, adding that the CreditWatch placement followed Rite Aid Corp.'s (B+/Watch negative/B-2) announced purchase of Jean Coutu's Brooks and Eckerd 1,858-store pharmacy chains in the United States for about $3.4 billion, consisting of $1.45 billion in cash, 250 million shares of Rite Aid valued at about $1.1 billion and the proposed but yet-to-be-determined assumption of Jean Coutu's $850 million 8.5% million 2014 senior subordinated notes.

Jean Coutu announced that it is offering to purchase for cash any and all of the notes outstanding, including a $35.00 consent payment for each $1,000 principal amount of the notes tendered and accepted for purchase by April 3, the agency added.

However, unless and until Jean Coutu receives the required consents to the proposed amendments to the subordinated note indenture, the company intends to pursue its declaratory judgment action to obtain a definitive resolution regarding the intended transfer of the subordinated notes to Rite Aid, S&P said.

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