S&P rates Stater notes B+

Standard & Poor's said it affirmed its ratings, including the B+ corporate credit rating, on Stater Bros. Holdings Inc. and assigned a B+ issue-level rating and 4 recovery rating to the company's $255 million senior notes due in 2018. The 4 recovery rating indicates an expectation of average (30% to 50%) recovery of principal in the event of default.

The outlook is stable.

The company plans to use the proceeds from the new notes, a new senior secured term loan and revolving credit facility and excess cash to retire its $525 million senior notes due in 2012 and thus reduce debt by $125 million.

The agency said the ratings on Stater Bros. reflect a weak business risk profile and a highly leveraged financial risk profile.

The ratings also incorporate S&P's expectation that the refinancing will eventually lead to an improvement in credit measures even though weak sales in Stater Bros.' marketing area may affect near-term operating performance.

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