Best Buy Rating Cut To ‘Junk’ By S&P On Potential Take-Private Deal

Standard & Poor's Ratings Services said Monday afternoon that it lowered its corporate credit rating and other ratings on Best Buy Co. Inc. (NYSE: BBY) from "BBB-" to "BB+," or junk status.

The downgrade came after Richard Schulze, founder and largest shareholder of the troubled electronics retailer, offered to buy the its remaining shares for a price in the range of $24 to $26 per share, which would value Best Buy at about $9 billion.

"The transaction, if completed, would materially weaken Best Buy's credit protection metrics because we believe it will add a significant amount of debt," Standard & Poor's credit analyst Jayne Ross explained in a statement.

Moreover, S&P is keeping Best Buy's ratings on CreditWatch with negative implications. That's a warning that another downgrade may be issued. The rating agency even hinted at a "multi-notch" demotion.

"Depending on the amount of debt to be used in a buyout and our view of a turnaround plan for the company's operations given the changing industry dynamics, we could lower the rating by multiple notches," Ross added.

Shares of Best Buy Co., Inc. (NYSE: BBY) closed up 13.32 percent, to $19.99 apiece, in Monday's session.