USA: Fitch affirmed Nash Finch’s ratings

Fitch has affirmed Nash Finch's (NAFC) bank credit facility rating of `BB' and its senior subordinated note rating of `B+'. The company's Rating Outlook has been changed to Stable from Negative. NAFC developed a strategy in 1998 to revitalize its existing business, streamline operations and improve operating efficiencies at its distribution centers. The company has undertaken various cost cutting measures and has improved operating performance. It is now poised to develop and expand new store prototypes, update its existing store base and acquire smaller store chains. The ratings factor in an intensifying competitive operating environment -- particularly reflecting supercenter expansion.

June 4, 2001

Fitch has affirmed Nash Finch’s (NAFC) bank credit facility rating of `BB’ and its senior subordinated note rating of `B+’.

The company’s Rating Outlook has been changed to Stable from Negative.

NAFC developed a strategy in 1998 to revitalize its existing business, streamline operations and improve operating efficiencies at its distribution centers. The company has undertaken various cost cutting measures and has improved operating performance. It is now poised to develop and expand new store prototypes, update its existing store base and acquire smaller store chains. The ratings factor in an intensifying competitive operating environment — particularly reflecting supercenter expansion.

As both a retail food store and wholesale food operator, the company’s focus includes customer service and selection, updating stores, pricing control, passing on manufacturer savings to customers as well as working capital management. NAFC has also focused on improving the utilization of its warehouses (backhaul, labor scheduling, etc.), category management/sku reduction and improving vendor allowances.

EBITDA increased during fiscal year 2000 to $107 million from $90 million in fiscal year 1999 due mainly to an increase in revenues from company-owned stores, improved utilization of its warehouses and better product management. This improvement produced Total Adjusted Debt/EBITDAR and EBITDAR/interest + rents of 4.6 times (x) and 2.2x, respectively. This compares to 5.3x and 2x in 1999.

NAFC’s Stable Rating Outlook reflects an improving financial profile as a result of a viable business plan to increase sales and EBITDA. Fitch notes that NAFC operates in a highly competitive industry that has experienced significant consolidation both at the wholesale and retail level.

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Nash Finch is a food wholesale company supplying products to independent supermarkets and military bases in approximately 30 states. The company owns and operates approximately 100 retail supermarkets throughout the Midwest.