Agency Lowers Tops' Debt Ratings

SN STAFF

WILLIAMSVILLE, N.Y. — Debt-ratings agency Moody's on Monday said it has downgraded the debt ratings on Tops Holding Corp., parent of Tops Friendly Markets here, following a review that began in August.

Moody's downgraded the corporate family and probability of default ratings to Caa1 from B3, and downgraded the rating of its $350 million of secured bonds to Caa1 from B3, signaling a slightly higher credit risk. The rating outlook is stable.

The new rating reflects the company's "high leverage, limited operating history as an independent company, its relatively modest size relative to competitors, and recent aggressive financial policies," Moody's said in a research note.

Supporting the rating are Tops' "historically stable operating performance" at its legacy stores, its strong position in its markets and the potential benefits from the acquisition of many of Penn Traffic's stores. Tops acquired 79 Penn Traffic locations earlier this year and is converting the 48 stores it has retained to the Tops banner.