S&P rates M-Foods notes B-

Standard & Poor's said it assigned its B+ corporate credit rating to M-Foods Holdings Inc. (parent company of Michael Foods Inc.). At the same time, S&P assigned a B- rating to M-Foods' proposed $100 million senior discount notes due 2013.

In addition, S&P affirmed its B+ corporate credit rating and revised its outlook on Michael Foods Inc. to stable from positive.

Proceeds from the issue along with about $66 million in cash on hand will be used to fund a dividend distribution to shareholders.

S&P said the ratings reflect Michael Foods' high debt leverage, commodity exposure, and the large number of competitors within the company's operating categories. Somewhat mitigating these concerns is the company's solid market position as the leading producer and distributor of egg products, with an estimated 44% U.S. market share.

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