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S&P Affirms Safelite Glass Corp Ratings

15 October 1997

S&P Affirms Safelite Glass Corp Ratings; To Merge With Vistar

    NEW YORK, Oct. 15 -- Standard & Poor's today
affirmed its single-'B' subordinated debt rating, and double-'B'-minus
corporate credit and bank loan ratings on Safelite Glass Corp. following the
company's announcement that it plans to merge with Vistar Inc. in a stock
transaction.  About $100 million of rated debt and $180 million of bank loans
are affected.
    The combined company will be a leading provider of auto glass services
and insurance-claims management solutions with annual sales through
company owned stores and independent subcontractors in excess of $800 million.
The merger will result in a near doubling of revenues for Safelite, which will
be the surviving entity.  However, pro forma debt protection measures will
remain largely unchanged.
    Current ratings reflect Safelite's aggressive financial risk profile,
countered by a solid business position and good prospects for revenue and
earnings growth over the next few years.  Safelite is the nation's largest
provider of replacement automotive glass (primarily windshields).  It also
processes automotive glass replacement claims for the insurance industry.
Safelite operates two windshield manufacturing facilities and distribution
centers, 74 warehouses, and over 500 retail service locations in 48 states.
Vistar currently owns 356 stores nationwide.  Both companies offer a broad
array of auto glass and related services, including glass replacement, rock
chip repair, truck backslider windows, and tinting services.  The combined
company will provide coverage through a 50-state network of company owned
stores covering 77% of the U.S. population.  Prospects for additional growth
remain good, as the combined company should benefit from increased outsourcing
opportunities in the insurance industry and from further consolidation in the
automotive glass replacement and repair market.
    A solid earnings outlook is important given the company's aggressive
financial risk profile.  Earnings before interest, taxes, depreciation, and
amortization (EBITDA)/interest is currently estimated to be about 1.8 times
(x) for Safelite and is about 2.0x on a pro forma basis.  Financial ratios are
expected to improve over time as a result of increased operating leverage as
the revenue base increases and from potential cost savings from the
combination of the two companies.  Pro forma funds from operations to debt,
currently estimated to be in the low teen percent range, is expected to
increase modestly to the mid-teen percent range over the next three years.
    OUTLOOK: STABLE
    Downside risk is mitigated by prospects for free cash generation over the
next few years which should enable Safelite to reduce debt levels.  However,
debt is not likely to be reduced enough to warrant an upgrade over the next
year or two, Standard & Poor's said. -- CreditWire

SOURCE  Standard & Poor's CreditWire