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Moody's rates Stater notes B2
Moody's Investors Service said it assigned a B2 (LGD 4, 53%) rating to Stater Bros. Holdings Inc.'s proposed $255 million senior notes due 2018 and affirmed company's B2 corporate family and probability of default ratings and $285 million senior notes due 2015 at B2 (LGD 4, 53%).
The outlook is stable.
Proceeds from the new notes, along with cash on hand and borrowings under a new $145 million senior secured term loan due 2014, will be used to repurchase Stater Bros.' existing $525 million 8 1/8% senior unsecured notes due 2012.
The ratings reflect the company's weak pro forma credit metrics and modest operating margins, Moody's said.
The ratings are supported by the company's good market presence in Southern California, positive free cash flow profile and good liquidity, the agency said.
The pro forma debt-to-EBITDA ratio is 5.8 times.
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