Moody's downgrades Moran Foods

Moody's Investors Service said it downgraded the corporate family rating of Moran Foods LLC, the parent of Save-A-Lot Holdings, LLC, to Caa1 from B3, along with the probability of default rating to Caa1-PD from B3-PD.

Moody's also said it downgraded the rating on the company's senior secured term loan to Caa2 from B3.

The outlook is negative.

This concludes a review that began in August, Moody's said.

The downgrades reflect a view that the company's operating performance will remain weak for the next 12 months as management initiatives will take time to gain traction, the agency said.

The agency also said it believes improvements in revenue and profits will be difficult to achieve in the increasingly competitive hard discount grocery space.

Operating margins are expected to remain very thin with weak liquidity and credit metrics in the next 12 months, Moody's said.

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