Moody’s cuts Woof loan, rates add-on B3

Moody’s Investors Service said it assigned a B3 rating to Woof Holdings, Inc.'s (Wellness Pet Co.) $138.5 million incremental first-lien term loan due December 2027. Concurrently, Moody's downgraded the rating on Wellness Pet's existing senior secured first lien term loan to B3 from B2.

The agency said it also affirmed the company's B3 corporate family rating, B3-PD probability of default rating and Caa2 senior secured second-lien term loan rating.

“The downgrade of the first-lien term loan rating reflects the dilution of collateral position due to the meaningful increase in the size of the first-lien debt together with the December 2022 upsize of the asset-based revolver to $150 million from $100 million. These actions collectively reduce expected first-lien term loan recovery in the event of a default. The roughly $872 million of combined first-lien term loan debt has a subordinate lien on ABL priority collateral (cash, accounts receivable and inventory) and a priority lien on collateral relative to a $235 million second lien term loan,” Moody’s said in a press release.

The company used the loan to repay revolver borrowings, boost balance sheet cash and pay fees.

The outlook is stable.

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