US Foods Inc. Ratings Placed On CreditWatch Negative On Smart Foodservice Acquisition

U.S.-based foodservice distributor US Foods Inc. (USF) has entered into an agreement to acquire Smart Foodservice Warehouse Stores for $970 million. We expect USF will fund the transaction with $700 million in new term debt financing and from existing liquidity sources. Assuming the transaction closes, we estimate USF's pro forma adjusted leverage could exceed 5x, compared with the mid-4x area currently. We are placing our 'BB+' issuer credit rating on USF on CreditWatch with negative implications. We are also placing our 'BB+' issue-level ratings on the company's senior secured term loans and 'BB' issue-level rating on its senior unsecured notes on CreditWatch with negative implications. We expect to resolve the CreditWatch after receipt of additional transaction details and further discussions

...March 6, 2020 - U.S.-based foodservice distributor US Foods Inc. (USF) has entered into an agreement to acquire Smart Foodservice Warehouse Stores for $970 million. We expect USF will fund the transaction with $700 million in new term debt financing and from existing liquidity sources. - Assuming the transaction closes, we estimate USF's pro forma adjusted leverage could exceed 5x, compared with the mid-4x area currently. - We are placing our '##+' issuer credit rating on USF on CreditWatch with negative implications. - We are also placing our '##+' issue-level ratings on the company's senior secured term loans and '##' issue-level rating on its senior unsecured notes on CreditWatch with negative implications. - We expect to resolve the CreditWatch after receipt of additional transaction details and further discussions with management regarding its deleveraging plans. CHICAGO (S&P Global Ratings) March 6, 2020--S&P Global Ratings today took the rating actions listed above. The negative...

Ratings Action