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DUFF & PHELPS RATES RYKOFF-SEXTON

 CHICAGO, Oct. 11 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of "BB" (Double-B) to Rykoff-Sexton's $130 million issue of senior subordinated notes. Rykoff-Sexton is a leading national player in the highly fragmented food service distribution industry and has a high quality reputation. Rykoff's operating results have been dampened in recent years by excessive operating costs and a weak economy.
 Positively, a new management team has implemented a turnaround plan including cost cutting initiatives, investment in management information systems, and efforts to boost revenues through revised compensation incentives and sales force expansion. A $31 million restructuring charge was taken in fiscal 1993 to provide for facility closures and a 5 percent workforce reduction. The benefits of this plan are expected to be realized over 2-3 years.
 A high debt ratio (59 percent including operating leases at fiscal 1993 yearend) limits Rykoff's financial flexibility. Planned capital investment in the business, including a new Los Angeles distribution facility, and the potential for acquisitions may limit the degree to which leverage can be reduced. Rykoff's exposure to the weak Southern California economy (23 percent of sales generated through the Los Angeles branch) may limit sales growth potential near-term.
 The company's diverse, high quality product line, well-trained sales force, and broad manufacturing capabilities are significant competitive advantages.
 -0- 10/11/93
 /CONTACT: Philip M. Zahn, CFA of Duff & Phelps Credit Rating Co., 312-368-3154/


CO: Rykoff-Sexton ST: California IN: FOD SU: RTG

TS -- NY030 -- 0660 10/11/93 11:50 EDT
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Publication:PR Newswire
Date:Oct 11, 1993
Words:248
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