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Moody's Upgrades Dollar General Ratings

NEW YORK — Moody's Investors Service here said Friday it was upgrading a rating of certain Dollar General debt based on changes in the ownership and other factors.

The debt-ratings agency lifted the corporate family rating and probability of default rating to Ba1 from Ba2, with a positive ratings outlook. Moody's also affirmed the company's speculative grade liquidity rating of SGL-1.

The upgrades reflects the fact Buck Holdings, a limited partnership controlled by New York-based investment firm Kohlberg Kravis Roberts, has reduced its equity ownership in Dollar General below 50%, to approximately 44%, which triggered a change in the composition of the board of directors so that KKR no longer has the majority of seats.

Moody's said the upgrade also acknowledges that Dollar General's operating performance and credit metrics are expected to remain strong, with debt to EBITDA of 3.0 times and EBITA (without depreciation) to interest expense of 4.4 times. The upgrade also follows the company's refinancing of approximately $880 million of its term loan, which extended its maturity to July 2017 from July 2014.

"The strengthening of the capital structure, coupled with the reduction of KKR's equity ownership, supports our view that Dollar General continues to apply a balanced and prudent financial policy," Moody's said.

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