S&P cuts Instant Brands

S&P said it downgraded its ratings for Instant Brands Holdings Inc. and its $450 million term loan to CCC+ from B-. The 3 recovery rating on the term loan is unchanged, indicating meaningful (50%-70%; rounded estimate: 55%) recovery in default.

“Instant Brands' operating performance remains below historical results and we anticipate global macroeconomic headwinds will likely delay a material recovery over the next 12 months. While the company's performance has sequentially improved, its net sales decreased by 3.8% in the third quarter of fiscal year 2022 (ended Sept. 30, 2022), relative to the same period last year, due to unfavorable foreign currency translation effects and lower retailer replenishment orders. This marked the fifth consecutive quarter of year-over-year sales declines,” S&P said in a press release.

“We believe the company's liquidity position will remain pressured and its capital structure has become unsustainable at current EBITDA levels,” the agency said.

The outlook is negative.

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