CHICAGO — Fitch Ratings here on Friday said it affirmed its ‘CCC’ default ratings on Supervalu , saying the divestitures announced Thursday reduced its exposure to competitive pressures, but are offset by slightly higher debt leverage and deteriorating conditions at its legacy businesses.
The ‘CCC’ rating represents extremely high risk.
As previously reported by SN , Minneapolis-based Supervalu agreed to a $3.3 billion offer from a consortium led by Cerberus Capital Management to acquire five of its retail chains. The deal divested Supervalu of the same chains it acquired from Albertsons in 2006.
“Comparing Supervalu’s business today (after carving out the businesses to be sold) with [its] business in fiscal 2006 prior to its acquisition of Albertsons reveals the deterioration in the legacy Supervalu business over the past six years,” Fitch said. “Sales at an estimated $17.2 billion today compare with sales of $19.9 billion in fiscal 2006 (year ending February 2006), or a 13% decline, reflecting identical-store sales declines and modest asset sales.”
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