Research Update: Heritage Grocers Group LLC 'B' Rating Affirmed; Issue-Level Ratings Affirmed; Outlook Stable

Heritage Grocers Group LLC (HGG) is acquiring Hispanic-focused specialty food retailer El Rancho Supermercado to add to its existing Cardenas Markets and Tony's Fresh Market banners. To fund the transaction, HGG plans to issue an additional $460 million in term-loan debt maturing in six years, upsize the revolver maturing in four years to $125 million (undrawn at close), and contribute an additional $232 million in equity. S&P Global Ratings affirmed its 'B' issuer credit rating to HGG. At the same time, we affirmed our 'B' issue-level rating and '3' recovery rating to the proposed debt facilities. The '3' indicates our expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default. The stable outlook reflects our

...- Heritage Grocers Group LLC (HGG) is acquiring Hispanic-focused specialty food retailer El Rancho Supermercado to add to its existing Cardenas Markets and Tony's Fresh Market banners. - To fund the transaction, HGG plans to issue an additional $460 million in term-loan debt maturing in six years, upsize the revolver maturing in four years to $125 million (undrawn at close), and contribute an additional $232 million in equity. - S&P Global Ratings affirmed its 'B' issuer credit rating to HGG. - At the same time, we affirmed our 'B' issue-level rating and '3' recovery rating to the proposed debt facilities. The '3' indicates our expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default. - The stable outlook reflects our view that the company will maintain adequate liquidity as it invests in operational improvements and store integration. We expect S&P Global Ratings-adjusted debt to EBITDA of low-6x over the next 12 months....

Research Update