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Moody's Reviews Dollar General for Upgrade

NEW YORK — Moody's Investors Services said Friday it has placed the long-term ratings of Dollar General Corp. on review for upgrade.

According to Moody's, the review will assess Dollar General's intentions to migrate to an investment-grade capital structure with the increased financial flexibility that would be afforded by a predominantly unsecured debt profile. The review will also focus on the company's new-store openings, the performance of its ongoing expansion in California and future plans for its DG Markets format, Moody's said.

The review "acknowledges the addition of two independent board members, resulting in the board of directors no longer being controlled by KKR," Moody's added. Kohlberg, Kravis, Roberts & Co., the New York-based investment group, now owns less than 20% of Dollar General through a limited partnership called Buck Holdings after selling shares last year.

Read more: Dollar General to Open 635 New Stores

Moody's said the review also acknowledges Dollar General's clearly stated financial policy, "the cornerstone of which is its announced 3.0-times lease-adjusted debt-to-EBITDAR target and its intention to put in place an unsecured capital structure, [plus] the expectation that Dollar General's operating performance will continue to be solid given the strong fundamentals of the dollar-store sector."

The ratings under review include Dollar General's corporate family rating at Ba1; probability of default rating at Ba1-PD; senior secured term loan first out tranche at Ba1; senior secured term loan first loss tranche at Ba2; senior unsecured notes at Ba2; and senior unsecured shelf at (P) Ba2. Moody's said the company's speculative grade liquidity rating of SGL-1 remains unchanged.

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