Fitch revises ConAgra to stable

Fitch Ratings said it affirmed ConAgra Foods, Inc.’s and subsidiary Ralcorp Holdings, Inc.’s long-term issuer default ratings at BBB- and short-term issuer default rating at F3.

The outlook was revised to stable from negative.

Fitch said the affirmation follows ConAgra’s announcement that it reached a definitive agreement to sell its private label operations to TreeHouse Foods for about $2.7 billion in cash and use the proceeds primarily for debt reduction, in accordance with the company's public statement and goal to maintain strong financial flexibility and an investment-grade rating.

Assuming ConAgra pays down $2 billion to $2.3 billion in debt, leverage would be 3 times to 3.2 times on EBITDA of $1.9 billion in EBITDA (after removing $300 million in EBITDA contribution from the private brand business), versus fiscal 2015 leverage of 3.6 times.

The transaction is expected to close in the first quarter of 2016.

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