Fitch Affirms Bon-Ton's IDR at 'B-'; Outlook Negative

NEW YORK--(Business Wire)--
Fitch Ratings has affirmed the following ratings on The Bon-Ton Stores, Inc.
(Nasdaq:BONT):

The Bon-Ton Stores, Inc.

--Issuer Default Rating (IDR) at 'B-'.

The Bon-Ton Department Stores, Inc.

--IDR at 'B-';

--Senior secured credit facility at 'B+/RR2'.

Bonstores Realty One and Two, LLC

--IDR at 'B-';

--Mortgage loan facility at 'B+/RR2'.

In addition, Fitch has revised its ratings on the senior unsecured notes for The
Bon-Ton Department Stores, Inc. to 'CC/RR6' from 'CCC/RR6' to reflect the new
issue rating definitions as of March 2009.

The Rating Outlook is Negative.

Bon-Ton's ratings reflect Fitch's expectation for considerable pressure on
comparable store sales trends given the weak department store sales environment
and the resulting pressure on the company's operating and credit metrics. The
Negative Outlook reflects Fitch's increasing concern about the company's
liquidity position beyond 2009 as its ability to fund its operations and meet
its financial commitments is dependent on stabilizing revenues.

Bon-Ton's operating (EBIT) income of $35 million for fiscal year (FY) 2009 ended
Jan. 2, 2009 showed a material deterioration from the $126 million reported in
FY2008. Gross margins firmed up in the first quarter, increasing 83 basis points
year over year as comparable inventory was down 13% at the end of the fourth
quarter versus a comp store sales decline of 8.6% for the quarter. Bon-Ton ended
the first quarter with comparable inventory down 11%. However, Fitch expects
Bon-Ton's operating profit could decline further and credit metrics weaken this
year if the anticipated gross margin improvements do not materialize for the
remainder of the year. The company's leverage as measured by adjusted
debt/EBITDAR stood at 7.8 times (x) for the latest 12 months ended May 2, 2009,
versus 7.6x for FY2009 and 5.6x for FY2008.

Fitch expects Bon-Ton will have adequate near-term liquidity, with $90 million
in excess capacity (after taking out the $75 million covenant limitation) under
its credit facility as of May 2, 2009. This contemplates modest free cash flow
generation this year, which will depend on sustained improvement in gross
margins, particularly in the critical holiday season. Excess capacity is
estimated to be somewhere in the $130 million-$180 million range (after taking
out the $75 million covenant limitation) at the end of the current fiscal year.
However, Fitch is increasingly concerned about the company's debt maturity
schedule. Bon-Ton will have to renew its $800 million asset-based facility
expiring March 2011 sometime next year and the size, terms and tenor could have
a potential impact on ratings.

The issue ratings shown above are derived from the IDR and the relevant Recovery
Rating. The $800 million senior secured credit facility due March 2011 is rated
'B+/RR2', indicating superior (71%-90%) recovery prospects in a distressed
scenario. The facility is secured by a first lien on substantially all of the
assets of the borrowing entities and guarantors, except for certain mortgaged
real property. Covenants require a minimum excess availability of $75 million
and place limits on debt, dividends, and capital expenditures. The $246 million
mortgage loan facility due 2016 is also rated 'B+/RR2', indicating superior
(71%-90%) recovery prospects in a distressed scenario. The facility is secured
by mortgages on 23 stores and one distribution center. These properties are
owned by bankruptcy-remote special purpose entities. The $510 million of senior
unsecured notes are rated 'CC/RR6', and are considered to have poor (0%-10%)
recovery prospects in a distressed scenario.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Monica Aggarwal, CFA, +1-212-908-0282
Karen Ghaffari, CFA, CPA, +1-212-908-0282
Media Relations:
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com

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