NEW YORK — Standard & Poor's Ratings Service here said Wednesday it has placed the ratings for Roundy's Supermarkets, including its B corporate credit rating, on CreditWatch with positive implications following the company's announcement it plans an initial public offering.
"The CreditWatch placement reflects our belief that proceeds from the proposed IPO, along with a concurrent refinancing, would reduce the company's total debt burden and improve credit ratios," Standard & Poor's said.
"We may consider a higher rating depending upon the amount of debt reduction and the terms of the new debt. Any final ratings outcome would incorporate our assessment of the company's near-term profitability prospects and our forecasted credit ratios.
"The company's operations have been relatively stable, and Roundy's has generated meaningful free cash flow which, if sustained, should allow for credit ratio enhancement. However, we see limited profit growth opporutnities, given the difficult industry environment resulting from intense competition, prolonged weakness in the U.S. economy and continued food cost inflation."
