S&P cuts Instant Brands

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

Net sales plunged 21.9% for fiscal year 2023’s first quarter. For seven straight quarters, Instant Brands sales have contracted for seven straight quarters.

“We estimate the company's S&P Global Ratings-adjusted leverage increased to over 20x (including about $230 million of preferred stock as debt) for the 12 months ended March 31, 2023, compared with about 14x in the same period the previous year. We believe the company's capital structure, which includes about $510 million in funded bank debt, is unsustainable at current EBITDA levels,” S&P said in a press release.

The outlook is negative.

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