Moody's Downgrades Smart & Final Ratings

ELLIOT ZWIEBACH

NEW YORK — Moody's Investors Service here said yesterday it is downgrading its ratings for Smart & Final Holdings Corp., a Los Angeles-based warehouse-store operator, and leaving the ratings under review for possible further downgrade. According to Moody's, its action was prompted by higher-than-expected leverage, lower margins and weak interest coverage due to the delay in executing its business plan resulting from its delayed acquisition in late 2007 of the Henry's and Sun Harvest banners from Whole Foods Market. The ratings that were downgraded and placed under further review are Smarter & Final's corporate family rating, which was downgraded to B2 from B1; its probability of default rating, to B2 from B1; its $150 million asset-based revolving credit facility due 2013 to Ba3 from Ba1; its $167 million first lien term loan due 2014 to B2 from B1; and its $140 million second-lien term loan due 2014 to Caa1 from B3. Smart & Final officials could not be reached for comment.

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