S&P turns Burgess outlook to negative

S&P said it revised its outlook for Burgess Point Purchaser Corp. to negative from stable and affirmed its B- ratings on the company and its senior secured debt.

“The negative outlook reflects our expectation that credit metrics and cash flows will remain weaker than previously forecast and the risk that profitability and liquidity deteriorate more substantially if there is operational underperformance. Burgess' year-to-date performance has been softer than expected due to lower sales volumes, Mexican peso headwinds, and ongoing acquisition and integration costs. Furthermore, the company continues to be burdened by substantial interest expense, with EBITDA interest coverage remaining below 1x for the 12 months ended Sept. 30, 2023,” S&P said in a press release.

The agency warned it now sees Burgess’ free cash flow deficits will be greater than it had originally forecast for 2023 and 2024 though the company has ample liquidity available.

S&P said it could downgrade Burgess if the company's liquidity weakened such that it could become constrained or if it believed the capital structure could become unsustainable.

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