S&P ups Utz Quality Foods

S&P said it upgraded Utz Brands Holdings LLC to B from B- and assigned a B- rating to the new public parent, Utz Brands Inc.

“We are also removing all of our ratings on the company from CreditWatch, where we placed them with positive implications on June 5, 2020. We are also withdrawing our issuer credit rating on Utz Brands Holdings LLC because we are moving the rating to the new parent,” S&P said in a press release.

Concurrently, S&P raised the issue-level rating on the company’s first-lien term loan to B+ from B- and revised the recovery rating to 2 from 3. The 2 recovery rating indicates S&P’s expectation for substantial (70%-90%; rounded estimate: 80%) recovery for the first-lien lenders. “The higher rating reflects Utz’s $112 million prepayment on its term loan and $125 million prepayment on its parity private placement notes, which will improve the recovery prospects for its lenders,” S&P said.

The upgrade follows the business combination with special-purpose acquisition company Collier Creek Holdings. Utz will about $380 million of the sale proceeds to pay down its preferred stock and first-lien debt. “Therefore, its leverage will decline to about 5x from the 9x area (including preferred stock as debt) as of the 12 months ended June 28, 2020,” the agency said.

The outlook is stable.

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