S&P: Dollar Tree Inc.'s New Debt Rated 'BBB'; Senior Notes Recovery Revised To '5', Rating Raised To 'BB'
The improved recovery on the senior notes comes given increased amortization on the senior secured credit facilities, resulting in lower principal and interest outstanding in a payment default scenario. We have valued the company on a going concern basis using a 6.0x multiple applied to our projected emergence-level EBITDA of around $980 million.
Same-store sales increased 1.2% in the quarter ended July 30, 2016, and leverage is now below 4.0x for the latest 12 months, down from the low-5.0x range in the year-ago period. Overall, we expect Dollar Tree to continue deleveraging over the next year given solid operating performance and financial policies aimed at debt reduction.