Research Update: Albertsons Cos. Inc. Rated 'B' On Planned Rite Aid Corp. Merger And Financing; Outlook Stable

Albertsons Cos. Inc. (ACI) is acquiring Rite Aid Corp. in a transformative deal that expands its customer base and modestly diversifies its business, to offset the heightened competition afflicting the U.S. grocery industry and results in ACI becoming a public company. We are assigning a 'B' corporate credit rating to ACI, (the same as existing legacy Albertsons and Rite-Aid) given the combined entity will remain a leveraged but large player in both the supermarket and drugstore sectors. We are assigning a 'BB-' issue-level rating and '1' recovery rating to ACI's new $5 billion ABL facility and ABL FILO term loan, as well as the new secured bridge loan facility, which will be launched subsequent to the ABL facilities. We are

...+ Albertsons Cos. Inc. (ACI) is acquiring Rite Aid Corp. in a transformative deal that expands its customer base and modestly diversifies its business, to offset the heightened competition afflicting the U.S. grocery industry and results in ACI becoming a public company. + We are assigning a 'B' corporate credit rating to ACI, (the same as existing legacy Albertsons and Rite-Aid) given the combined entity will remain a leveraged but large player in both the supermarket and drugstore sectors. + We are assigning a '##-' issue-level rating and '1' recovery rating to ACI's new $5 billion ABL facility and ABL FILO term loan, as well as the new secured bridge loan facility, which will be launched subsequent to the ABL facilities. + We are raising the ratings on Albertsons' existing senior unsecured notes and the company's Safeway and New Albertsons notes and affirming the ratings on Albertsons' existing term B loans. + The stable outlook reflects ACI's prospective positive free operating cash...

Research Update