S&P rates KeHE notes B

Standard & Poor's said it assigned a B+ corporate credit rating to KeHE Distributors Holdings LLC.

The outlook is stable. KeHE Distributors Holdings is the parent company of KeHE Distributors LLC and KeHE Finance Corp., which are co-issuers of the proposed $200 million second-lien notes due 2021.

S&P said it assigned a B issue-level rating a 5 recovery rating to the proposed notes, the proceeds of which the company will use to refinance borrowings under its existing revolving credit facility, repay subordinated debt and redeem preferred stock held primarily by Prudential Capital and its affiliates.

"The rating on KeHE Distributors Holdings LLC (KeHE) reflects our assessment of a 'weak' business risk profile and an 'aggressive' financial risk profile," S&P credit analyst Ana Lai said in a news release.

"The business risk profile reflects KeHE's small scale, niche focus in the highly competitive wholesale grocery distribution industry, and some customer concentration. The positive growth prospects of the specialty segment of food retailing, including the natural & organic (N&O) segments, somewhat offset these risks," Lai added in the release.

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