Dollar General Debt to Soar in Buyout

GOODLETTSVILLE, Tenn. — Dollar General plans to raise $1.9 billion in a series of debt offerings that will finance its pending takeover by Kohlberg Kravis Roberts. The retailer here said it would have approximately $5.4 billion in debt at the time of the merger. The debt will consist of notes offered in a three-part sale next week including $625 million in senior cash-pay notes and $725 million in senior pay-in-kind toggle notes that have interest payable in cash or in additional notes. The company will also issue new unsecured debt of $550 million in cash-pay notes. New York-based rating agency Standard & Poor’s this week lowered Dollar General’s corporate rating to “B,” five notches blow its previous level of “BB ” because of the company’s new leveraged structure and recent execution difficulties. KKR announced it would buy Dollar General for around $6.9 billion in March. The deal is expected to close shortly after the financing activities next week.

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