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ConAgra Debt Rating Cut at S&P

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By Paul Ausick Updated Published
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Ratings agency Standard & Poor’s has cut its ratings on debt for ConAgra Foods Inc. (NYSE: CAG) from BBB to BBB- following the company’s announcement that it would finance its $6.8 billion acquisition of Ralcorp Holdings Inc. (NYSE: RAH) primarily with debt. S&P’s outlook for ConAgra is listed as “stable.”

The ratings cut leaves ConAgra’s debt just one notch above junk.

An S&P credit analyst said:

The downgrade for ConAgra reflects our belief that ConAgra will not be able to restore its credit measures, including adjusted debt to EBITDA to below 3x and funds from operations to total debt to nearly 30%, within two years.

The ratings firm estimates that ConAgra’s debt following the acquisition will total more than $10 billion, and other adjustments will push the total to about $11 billion.

ConAgra’s shares posted a 52-week high earlier this month, following better-than-expected quarterly results. Shares are trading down about 0.5% in the premarket this morning, at $29.06 in a 52-week range of $23.64 to $31.12.

Paul Ausick

Photo of Paul Ausick
About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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