Moody's Assigns Roundy's Facility a Provisional Rating of B1

NEW YORK — Moody's Investors Service here said it has assigned a provisional rating of B1 to Roundy's Supermarkets [1]' proposed $125 million first lien revolving credit facility and its proposed $675 million first lien term loan.

Moody's also said it was affirming the company's B2 corporate family and probablilty of default ratings, with a negative outlook. The proposed credit facilities will be used to refinance the company's existing debt, concurrent with a planned initial public offering this month. Proceeds from the IPO are expected to be used to repay part of Roundy's existing debt.

Moody's said the provisional ratings are subject to closure of the transaction as proposed and a review of the final documentation. Once the transaction is completed, Moody's said the provisional ratings will be removed and the debt instruments will be rated B1. It also said Roundy's probability of default rating could be lowered to B3, consistent with Moody's methodology for an all-first lien debt structure.

The ratings outlook is likely to be stabilized if refinancing is consummated as proposed, which would improve liquidity, Moody's said.

"The resolution of the pending debt maturities is a critical rating factor, and we therefore view a refinancing as key to improved liquidity and financial flexibility," the company said. "Failure to close the proposed transactions could result in further negative pressure on the ratings."