Fitch gives Northeast Grocery loans B+

Fitch Ratings said it assigned a first-time B+ long-term issuer default rating to Northeast Grocery, Inc. and its subsidiaries Tops Market Corp. (Tops) and the Golub Corp. The agency also gave expected BB+/RR1 ratings to Northeast Grocery's planned $550 million senior secured term loan and to the asset-based lending credit facility, which is co-issued by Tops and Golub. The outlook is stable.

“Northeast Grocery's ratings reflect the company's moderate scale, with revenue and EBITDA in the mid-$6 billion and low-$300 million ranges, respectively. Although the company has good market shares in its key markets in New York and neighboring states, its limited size and cash flow leave it somewhat vulnerable to strengthening competition from scaled, national players in the grocery and general merchandise space,” Fitch said in a press release.

The agency noted Northeast’s “good local positioning and merger-driven synergy achievement which support positive FCF generation over the rating horizon. The rating also considers the company's reasonable leverage which Fitch projects to be approximately 4x in 2023 (fiscal year ending April 2024) and in the high-3x range beginning 2024.”

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