Moody’s upgrades Utz

Moody’s Investors Service said it upgraded the corporate family rating and the probability of default ratings of Utz Quality Foods, LLC to B1 and B1-PD from B2 and B2-PD, respectively. Moody’s also assigned a Speculative Grade Liquidity rating of SGL-2.

The agency affirmed the rating on Utz’s first-lien term loan at B2.

The actions follow the announcement Utz will merge with Collier Creek Holdings, a special purpose acquisition company to form Utz Brands, Inc. a publicly traded company, which will be listed on the New York Stock Exchange.

“In the transaction, Collier Creek’s cash will be used to materially reduce Utz’s debt, lowering its debt to EBITDA leverage,” Moody’s said in a press release.

Moody’s said it sees Colier’s cash being used to repay more than $200 million of Utz’s first-lien debt, cutting debt-to-EBITDA leverage from above 6x as of March 2020 to under 4x.

The agency also revised the outlook to positive from stable.

“The positive outlook reflects Moody’s expectation that Utz will continue to deleverage as it recognizes synergies and undertakes both growth and productivity initiatives,” Moody’s said.

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