DBRS has announced that it:
has today confirmed the Issuer Rating and Senior Unsecured Debt rating of RONA inc. (RONA or the Company) at BB (high) and the Preferred Share rating at Pfd-4 (high). The trends have been changed to Stable from Negative. The recovery rating on the Company’s Senior Unsecured Debt has been changed to RR3. The confirmation and trend change reflect improvement in the Company’s operating performance after three consecutive years of poor relative execution in an intense competitive environment. Positive trending same-store sales in the Company’s retail network (-3.4% in Q1, -0.7% in Q2 and +2.0% in Q3) as a result of changed merchandising strategies, the repositioning of the Reno-Depot and Totem banners, and the closure of 17 underperforming stores, combined with significant cost savings from recent reorganization efforts, to result in a notable improvement to EBITDA. The Company’s financial profile also improved at the end of F2013 and into F2014 as RONA used a portion of the proceeds from the sale of its Commercial and Professional division to reduce balance-sheet debt.
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DBRS expects that RONA will continue to use free cash flow to increase shareholder returns. RONA’s credit risk profile will continue to strengthen within the current rating category if operating performance continues to improve (i.e., same-store sales growth and margin expansion), and key credit metrics remain in a range considered acceptable for the current rating (i.e., lease-adjusted debt-to-EBITDAR well below 4.0x and lease-adjusted EBITDA coverage above 4.5x) in the near-to medium-term.
As previously reported, RON.PR.A was downgraded to Pfd-4(high) [Trend Negative] by DBRS in March 2013, and to P-4(high) by S&P in April 2013. The issue was hammered after the first downgrade and has not recovered.
RON.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.
This entry was posted on Friday, November 21st, 2014 at 1:55 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
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DBRS Improves Trend On RON.PR.A To Stable
DBRS has announced that it:
As previously reported, RON.PR.A was downgraded to Pfd-4(high) [Trend Negative] by DBRS in March 2013, and to P-4(high) by S&P in April 2013. The issue was hammered after the first downgrade and has not recovered.
RON.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.
This entry was posted on Friday, November 21st, 2014 at 1:55 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.