Moody's Lowers Roundy's Rating Outlook

NEW YORK -- Moody's Investor Service here said yesterday it was lowering its rating on Roundy's Supermarkets, Milwaukee, Wis., from stable to negative while affirming the company's debt rating.

NEW YORK -- Moody's Investor Service here said yesterday it was lowering its rating on Roundy's Supermarkets, Milwaukee, Wis., from stable to negative while affirming the company's debt rating. The moves follow Roundy's agreement to acquire five Jewel-Osco stores in the Milwaukee metropolitan area from Minneapolis-based Supervalu -- a purchase Roundy‘s will finance with proceeds from the $57.4 million add-on to its existing Term Loan B, which will result in approximately $800 million to be outstanding under the term loan at closing, Moody's pointed out. Moody's said the negative rating outlook reflects Roundy's accelerating negative comparable-store sales "and the challenge of reversing this trend, given the extent of competition." It also said the rating could be downgraded "if comparable-store sales are likely to remain negative, if market share erodes due to competition or if debt to [operating cash flow] rises above 6 times. Conversely, the rating outlook could stabilize if comparable-store sales become positive, if operating profitability further improves and if debt-to-EBITDA is likely to be sustained below 5.5 times." -- Elliot Zwiebach