S&P: First Quality to negative

Standard & Poor’s said it affirmed all of the ratings on First Quality Enterprises Inc., including its BB corporate credit rating.

The agency also said it revised the outlook to negative from stable.

S&P also said it affirmed the BBB- rating on the company’s $1.6 billion senior secured bank credit facilities due 2019 with a recovery rating of 1, indicating 90% to 100% expected default recovery.

The agency also said it affirmed the BB rating on the company’s $600 million senior unsecured notes due 2021 with a recovery rating of 4, indicating 30% to 50% expected default recovery.

The outlook revision reflects the recent increase in competition in First Quality’s segments, along with an expectation that the company will continue to generate meaningful negative discretionary cash flow over the next two years, S&P said.

The ratings take into account the company’s defensible position primarily as a private-label products manufacturer in categories with stable end-user demand and satisfactory track record of organic earnings growth over the last few years, the agency said.

The ratings also consider First Quality’s customer concentration and weak bargaining power with significant customers, particularly with Wal-Mart and Sam’s Club, S&P added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.