S&P ups Roundy's; outlook negative

Standard & Poor's said it raised its corporate credit rating on Roundy's Supermarkets Inc. to B+ from B, the rating on the company's proposed $175 million floating-rate notes due 2012 to B- from CCC+ and the rating on a proposed $825 million bank facility to B+ from B. The bank facility's recovery rating remains at 3.

The outlook is negative.

S&P said its action reflects Roundy's revised capital structure, which lowered the company's debt-financed dividend to $400 million from $550 million.

The negative outlook reflects credit metrics that are weak for current ratings levels, the agency said. Pro forma for the revised refinancing and dividend payout, Roundy's will have $938 million of debt. Based on 12-month EBITDA of $197 million at July 2, lease-adjusted debt to EBITDA will be 6.6x and lease-adjusted EBITDA interest coverage will be 2x.

S&P said it anticipates that the weak credit metrics will improve to the mid-5x area by the end of 2006 and that Roundy's business profile and adequate liquidity levels provide support for the rating and would partially offset a weaker financial profile.

© 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.