Moody's: Tops Holding notes Caa2

Moody's Investors Service said it assigned a Caa2 rating to Tops Holding II Corp.'s proposed $150 million senior notes due 2018.

Moody's also affirmed the B3 corporate family rating and B3-PD probability of default rating of Tops Holding Corp. and affirmed the B3 rating of its $460 million senior secured notes.

The proceeds of the proposed transaction will be used to pay a dividend to shareholders.

The outlook was changed to negative. The proposed notes will be unsecured and will not be guaranteed by any direct and indirect subsidiaries of Tops Holding Corp.

"Proforma for the transaction Debt to EBITDA is high at over 6.5 times (Moody's adjusted) and credit metrics position the company weakly in the B3 rating category," Moody's senior analyst Mickey Chadha said in a news release. "The ratings incorporate our expectation financial leverage will be reduced to below 6.0 times by the end of fiscal 2013."

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