S&P assigns C&S BB-, notes B

S&P said it assigned C&S Group Enterprises LLC a BB- issuer rating and gave its planned $300 million in senior unsecured notes a B rating and 6 recovery rating. The 6 recovery rating indicates an expectation for negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default.

“C&S controls about 20% market share in a highly competitive and consolidating industry. It benefits from long-term vendor and supply contracts, which helps mitigate continued supermarket self-distribution. Despite phasing out its agreements with Ahold over the next three years, we expect C&S to remain one of the four largest wholesale grocery distributors in the U.S. with a leading market share, especially in the mid-Atlantic and Northeast,” S&P said in a press release.

Proceeds will be used to reduce outstanding debt under its $1.5 billion asset-based lending revolving credit facility due in September 2023 and for general corporate purposes.

The outlook is stable. “The stable outlook on C&S reflects our expectation that modest improvement in its thin margins over the next few years will offset the gradual loss of contracts with Ahold and support adjusted debt to EBITDA in the low-3x area and FFO to debt above 20% over the next 12 months,” S&P said.

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