Moody's lowers SunOpta Foods

Moody's Investors Service said it downgraded SunOpta Foods Inc.'s corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and senior secured second-lien notes rating to Caa2 (LGD 5) from Caa1 (LGD 5).

Moody's also said it affirmed the company's SGL-3 speculative grade liquidity rating.

The outlook remains stable.

The downgrades reflect an expectation of negative free cash flow and high leverage for the next 12- to 18-months due to continuing operational challenges and execution risks around the company's value creation plan, the agency said.

The ratings are constrained by the company's continued operational underperformance and an expectation that leverage will be sustained at higher than 7.5x in the next 12- to 18-months, Moody's said.

The ratings also consider the company's exposure to raw material price increases and limited ability to pass through price increases to customers, along with its exposure to food safety recalls and liability claims, the agency said.

The company benefits from participation in the private label organic and non-genetically modified (non-GMO) food and beverage categories, which have attractive long-term growth prospects, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.