S&P prunes Gabe’s

S&P said it lowered its ratings for Mountaineer Merger Corp. (Gabe's) and its first-lien term loan and senior secured notes to CCC+ from B-. The 3 recovery rating is unchanged.

“The downgrade reflects soft demand trends, depressed profitability, and higher than expected cash burn, which has led to high leverage. Gabe's results have been weaker than expected as lower consumer discretionary spending, merchandising challenges, and ongoing inflationary cost pressures (e.g., labor and outbound freight costs) continue to strain profitability and cash flow,” S&P said in a statement.

The agency said it forecasts a free operating cash flow deficit of about $30 million in fiscal 2023 before improving to modestly negative to flat in 2024, in conjunction with increased leverage.

The outlook is negative.

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