The Globe And Mail

DBRS downgrades Rona debt
The Globe And Mail

Rona Inc.’s credit rating has been downgraded to below investment grade by DBRS amid the troubled Quebec company’s efforts to restructure its business.

The ratings agency said Tuesday that the home improvement retailer’s continued deterioration in operating performance means its credit risk profile is no longer consistent with investment grade debt. The competitive environment for Rona is looking increasingly difficult, given Home Depot Inc.’s strong performance and rumblings from Lowe’s Cos. Inc. about expansion in Canada, DBRS added.

The agency downgraded the issuer rating, which speaks to the company as a whole, along with Rona’s senior unsecured debt to double-B (high) from triple-B (low). It also downgraded the company’s preferred share rating to Pfd-4 (high), or speculative, from Pfd-3 (low) and maintained its negative rating.

The Quebec-based company lost $17.9-million, or 15 cents per share, for the period ended Dec. 30, compared to a loss of $153.6-million or $1.19 per share a year earlier. Pointing to Rona’s 2012 full-year results, DBRS noted it was the third consecutive year of declining EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDA margins.

Une maudite chance qu’au Québec les politiciens n’ont pas fait croire à une population trop naïve qu’il fallait que la Caisse de Dépôt investisse dans Rona parce que cette quincaillerie représentait un fleuron économique… On aurait vraiment eu l’air con si c’était arrivé…