Moody's assigns BevMo notes Caa2

Moody's Investors Service said it assigned a Caa2 rating to Beverages & More, Inc.'s (BevMo) proposed $180 million senior secured notes due 2017 and affirmed its Caa1 corporate family rating and Caa1-PD probability of default rating.

The outlook remains stable.

Proceeds from the proposed senior secured notes will be used to repay the company's $125 million senior secured notes due 2014, $41 million senior secured HoldCo PIK notes due 2015 and pay for transaction expenses.

"The proposed refinancing would address BevMo's upcoming maturities," Moody's analyst Raya Sokolyanska said in a news release, "However, we anticipate credit protection metrics will remain weak in the intermediate term, including lease-adjusted leverage near 7.0 times and interest coverage as measured by EBITA/interest expense near 1.0 time. The company's growth prospects are limited by the mature nature of alcohol retailing and continuing intense competition from grocery and club stores. Given our projections for weak free cash flow generation, debt repayment potential is also limited."

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