S&P: Stater Brothers unaffected

Stater Brothers Holdings Inc.'s (B+/positive/--) ratings are not affected by its announcement that it will be forced to redeem the $53.5 million of 9.36% senior secured notes due 2008 issued by its 50%-owned Santee Dairies Inc. subsidiary, Standard & Poor's said Tuesday.

S&P said the redemption results from a change-in-control covenant in the notes. The change in control follows Stater's settlement of a non-performance lawsuit against Hughes Markets Inc., Ralphs Grocery Co., Fred Meyer Inc., and the Kroger Co., whereby Stater received the 50% of the stock it did not previously own.

S&P said Stater has sufficient cash to make the payment without detriment to its financial condition.

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