Moody's assigns Northeast Grocery B2

Moody's Investors Service said it assigned Northeast Grocery, Inc. a B2 corporate family rating, a B2-PD probability of default rating and a B3 rating to Northeast Grocery's planned $550 million senior secured term loan. The outlook is stable.

Northeast Grocery was formed in November 2021 through the merger of Tops Markets Corp. and the Golub Corp., owner and operator of Price Chopper/Market 32 and 1 Market Bistro store.

“Northeast Grocery's B2 corporate family rating reflects the company's relatively small scale within the highly competitive grocery retail sector and its regional geographic concentration in just six Northeast states with the large majority of stores in New York. The rating also reflects the company's moderate pro-forma debt/EBITDA at about 3.8x although EBIT to interest is weak at about 1.2x. Northeast Grocery's recent profitability has weakened due to ongoing disinflation and volatile commodity prices, a trend we expect will continue over the next 12 months,” Moody’s said in a press release.

The company will use the loan along with $39 million of borrowings from its asset-backed revolving credit facility will be used to repay the company's $513 million of debt and fund $37 million of the company's $60 million tuck-in acquisition with the remainder to pay related fees and expenses.

Moody’s said it expects the company's leverage will rise to 4.1x at the fiscal year ended April 30, 2024 and improve to about 3.7x in 2025 due to better earnings and debt repayment.

© 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.