George Weston Ltd.

The stable outlook on GWL reflects S&P Global Ratings' expectation that, absent any significant debt-financed transaction at CP REIT, GWL's consolidated adjusted debt-to-EBITDA ratio will be in the low-to-mid 3x area by 2020. This reflects our assumption that Loblaw will continue to operate efficiently and protect margins against the backdrop of increased competition from existing and new players in the food retail industry. We could lower our ratings on GWL if consolidated adjusted debt-to-EBITDA deteriorates to above 3.75x (a revision from our previous 3.50x threshold), with poor prospects for improvement over a two-year period. We believe that such a scenario could occur if increased competition or operational missteps were to result in a declining EBITDA trend at Loblaw while it

...GWL subsidiary Loblaw is the largest food retailer in Canada with a good portfolio of stores.George Weston Ltd.'s (GWL) subsidiary Loblaw will generate about 80% of GWL's adjusted EBITDA. With 1,085 corporate and franchise food retail stores along with about 1,335 associate-owned Shoppers Drug Mart stores, Loblaw has significant geographic diversity with about a 30% share of Canadian food market. At the same time, with the well-recognized banners/food retail stores catering to both discount and premium customers, Loblaw is able to service the full spectrum of customers. CP REIT provides a large development pipeline. The CP REIT subsidiary has about 34 properties under active development at present. The long-term development pipeline has more than 64 properties in urban markets, with a focus on residential mixed-use projects, leading to less exposure to Loblaw. The total cost of the development pipeline is estimated at about C$1.14 billion. We expect GWL's consolidated leverage to remain...

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