Mr. Ben Deutsch of DBRS reports

Debt rated:  issuer rating

Rating:  BB (high)

Trend:  n/a

Rating action:  under review with positive implications

Debt rated:  senior unsecured debt

Rating:  BB (high)

Trend:  n/a

Rating action:  under review with positive implications

Recovery rating:  RR3

Debt rated:  preferred shares

Rating:  Pfd-4 (high)

Trend:  n/a

Rating action:  under review with positive implications

DBRS Ltd. has placed the ratings of Rona Inc. under review with positive implications following the company's announcement that it has entered into a definitive agreement under which Rona will be acquired by Lowe's Companies Inc. (please see separate DBRS press release) for a total transaction value of $3.2-billion. The total transaction value comprises Lowe's offer to acquire Rona's issued and outstanding common shares for $24 per share in cash as well as its issued and outstanding preferred shares for $20 per share, plus Rona's outstanding debt.

The transaction has been approved by Rona's board of directors and is supported by its management team, but will be subject to customary closing conditions including approval by Rona's shareholders and regulators. Rona expects the transaction to close in second quarter 2016. Lowe's has agreed to key commitments for Rona and its stakeholders, including to headquarter its Canadian business in Boucherville, Que.; maintain Rona's store banners; continue distribution to Rona's independent dealers; and employ the majority of Rona's staff.

Rona's under review -- positive implications status reflects Lowe's current ratings (A (low) and R-1 (low) as rated by DBRS), the intention to purchase Rona's outstanding preferred shares and the assumption of Rona's outstanding senior unsecured debt. As of Sept. 27, 2015, Rona had approximately $313-million of senior unsecured debt outstanding, consisting of $116-million of senior unsecured debentures and $197-million drawn on its revolving credit facility (maximum limit of $700-million). DBRS notes that the company's senior unsecured debentures will mature in October, 2016.

DBRS will proceed with its review as more information becomes available and aims to resolve the under review status by the closing of the transaction.