Moody's affirms Roundy's

Moody's Investors Service said it affirmed the corporate family rating of Roundy's Supermarkets Inc. at B2, its proposed $825 million bank loan at B2 and its proposed $175 million senior note issue at B3.

The outlook is stable.

Net proceeds will be used to pay a $400 million dividend distribution to shareholders and to refinance the existing $118 million term loan and $300 million senior subordinated notes.

The agency said the ratings reflect the limited flexibility of the post-transaction capital structure with respect to liquidity and credit metrics, Moody's opinion that supermarket retailing competition in the company's trade area will intensify and the ongoing challenges as the company completes the transition from a grocery wholesaler to a supermarket operator.

However, the ratings also recognize the company's position as the leading supermarket operator in Wisconsin, substantial progress in the multi-year plan to transition from a grocery wholesaler to a grocery retailer and the steady, if low-margin, revenue stream from the remaining wholesale distribution segment, the agency said.

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