S&P lifts Roundy's loan, rates new loan

Standard & Poor's said it raised the rating on Roundy's Supermarkets Inc.'s first-lien bank facility to B+ with a recovery rating of 2, assigned a CCC+ rating with a recovery rating of 6 to its proposed second-lien term loan and affirmed the B corporate credit rating.

The outlook was changed to stable from negative.

Roundy's wants to issue a $150 million second-lien secured term loan due in 2016 to finance a $150 million dividend. As part of this transaction, the company will convert the current bank facility to a first-lien bank facility.

The agency said the upgrade of the existing loan is primarily due to an increase in the EBITDA recovery multiple assumption to 5.5 times from 5 times.

The outlook revision reflects S&P's expectation that the company will have more cushion under its bank facility following the expected covenant amendments under its first-lien bank facility.

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