S&P rates Tops notes B+, view to negative

Standard & Poor's said it revised the outlook to negative from stable on Tops Holdings Corp.

The agency also said it affirmed its B+ long-term corporate credit rating.

The outlook revision is based on Tops' increased debt and weakened credit ratios following a dividend payment to its equity sponsor, S&P said.

The revision also reflects the possibility that the company's operating performance could be moderately weaker than expected, the agency said.

S&P also assigned a B+ rating and a 4 recovery rating to the company's proposed $460 million senior secured note offering. The notes are rated the same as the corporate credit rating. The 4 recovery rating indicates 30% to 50% expected recovery in a default.

The ratings reflect the company's highly leveraged financial risk profile, the agency said.

The supermarket industry is experiencing continued incursions from discounters, dollar stores, warehouse clubs and drug stores, S&P said.

Nevertheless, the agency said it believes this competition is tempered in the company's markets relative to the rest of the country and that the company is reasonably well-positioned to maintain its current market share.

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