Fitch Ratings has affirmed Fitch has also affirmed the company's credit facilities and senior unsecured notes. The Rating Outlook is Stable. A complete list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The rating reflects
Restoring top-line growth to the
The company has targeted
Each of SVU's segments will continue to encounter competitive headwinds. The retail food segment faces long-term pressure on its gross margins due to competition from discounters, dollar stores, and specialty supermarkets. Similarly, there is long-term margin pressure within the independent business due to competitive pressures facing its independent grocer customers. The
Despite these challenges, Fitch Ratings expects EBITDA will improve in fiscal 2014 (ending February) to the low
Cost reductions should drive modest improvement to EBITDA in fiscal 2015, though Fitch sees limited upside beyond fiscal 2015 as cost reduction opportunities are expected to diminish and the top line could remain under pressure. Adjusted debt/EBITDAR should improve to the high 4.0x range in fiscal 2014 from 5.0x as of
The refinancing risk related to the 2016 note maturity has moderated following a tender offer that reduced the balance outstanding to
SVU's liquidity is adequate, supported by a
Fitch's ratings on individual debt issues are based on the Issuer Default Rating (IDR) and the expected recovery in a distressed scenario. Fitch has allocated across the capital structure an assumed enterprise value of
The senior unsecured notes are rated 'CCC+/RR5', which implies a 10 percent-30 percent recovery. Fitch notes that in a liquidation scenario, SVU's company pension underfunding of
A downgrade could result if negative operating trends across the business begin to constrain FCF, making it more difficult to address the 2016 maturity with a combination of FCF and asset sales.
An upgrade could result with a reversal of negative business trends supported by a turnaround of the
Fitch affirms SVU's ratings as follows:
--IDR at 'B-';
--Senior unsecured notes at 'CCC+/RR5'.
The Rating Outlook is Stable
Additional information is available at 'fitchratings.com'.
--'Corporate Rating Methodology' (
--'Recovery Ratings and Notching Criteria for Non-Financial Corporate Issuers' (
Corporate Rating Methodology - Effective from
Recovery Ratings and Notching Criteria for Non-Financial Corporate Issuers
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Fitch Ratings has affirmed
Fitch has also affirmed the company's credit facilities and senior unsecured notes. The Rating Outlook is Stable. A complete list of rating actions follows at the end of this release.