ROSH HAAYIN, Israel, May 22 /PRNewswire-FirstCall/ -- Blue Square-Israel
Ltd. (NYSE: BSI) (hereinafter: 'Blue Square') announced that it has received
from Standard & Poor's Maalot a report regarding downgrade of the rating of
the debentures issued by Blue Square on August 2003.
The report is enclosed.
* * *
Blue Square-Israel Ltd. is a leading retailer in Israel. A pioneer of
modern food retailing, in the region. Blue Square currently operates 199
supermarkets under different formats, each offering varying levels of
services and prices. For more information, please refer to the Blue
Square-Israel Ltd. website at http://www.bsi.co.il.
Forward Looking Statements
The statements contained in this release, except for historical facts,
which are forward-looking with respect to plans, projections, or future
performance of the Company, involve certain risks and uncertainties.
Potential risks and uncertainties include, but are not limited to, risk of
market acceptance, the effect of economic conditions, the impact of
competitive pricing, supply constrains, the effect of the Company's
accounting policies, as well as certain other risks and uncertainties which
are detailed in the Company's filings with the Securities and Exchange
Commission, particularly the Annual Report on Form 20-F for the year ended
December 31, 2007.
Contact:
Blue Square-Israel Ltd.
Elli Levinson-Sela
General Counsel & Corporate Secretary
Telephone: +972-3-9282670
Fax: +972-3-9282498
Email: ellils@bsi.co.il
May 21, 2009
Public announcement
Blue Square Israel Ltd.
Downgraded, Off CreditWatch
Primary Analyst: Tamar Stein tamars@standardandpoors.com
Secondary analyst: Hila Perelmuter hilap@standardandpoors.com
On May 22, 2009, Standard & Poor's Maalot lowered its rating on the
Series A and B bonds issued by food retailer Blue Square Israel Ltd. (BSI) to
'ilA+' from 'ilAA'. At the same time, the rating was removed from
CreditWatch, where it had been placed with negative implications on Feb. 2,
2009. The outlook is stable.
The downgrade reflects the erosion of the company's financial position
during 2008. This can be seen in BSI's debt coverage ratios, which we no
longer view as in line with an 'ilAA' rating; high leverage; and low
profitability; as well as by the deterioration in BSI's market share
throughout the year, which has been partially mitigated in 2009.
These negative factors are somewhat offset by BSI's strong liquidity, No.
2 position in Israel's retail sector, and diversified activities.
The stable outlook reflects our belief that BSI is taking measures (and
will continue to do so) to stop the erosion in it market share[1], improve it
financial ratios, and avoid massive investments that can negatively affect
its financial profile and leverage.
Rationale
The downgrade reflects the weakening of BSI's financial strength in 2008,
owing to the deterioration in its financial performance, heightened industry
risk due to mounting competition--especially form the private discounters
(which are increasing their trading volumes), and a decline in both market
share and profitability. Standard & Poor's Maalot believes that the higher
competition could put downward pressure on selling prices and on the
profitability of all Israeli food retail chains.
The rating is supported by the company's position as the second-largest
Israeli food retailer, with good nationwide coverage and diversification
among several sectors (organic and nonorganic food, non-food within BEE
Group, and real estate).
We continue to evaluate the possible risks related to BSI's entrance into
the organic food market, which is a new segment in Israel with potential for
development but with no profitability track record and relatively higher
exposure to market volatility than the traditional food sector.
BSI benefits from the positive characteristics of the retail food sector,
which, by nature, is predictable and less exposed than average to volatile
swings in demand as a result of economic cycles. The Israeli food retail
sector is also characterized by its relatively small size.
