S&P gives INW, loans B-

S&P said it assigned B- ratings to INW Manufacturing LLC and its planned the term loans. The recovery rating on the term loans is 3, indicating an expectation for meaningful recovery (50%-70%; rounded recovery: 65%) in default.

Private equity firm Cornell Capital acquired INW. To help finance the deal, INW obtained a $340 million first-lien term loan, a $75 million delayed-draw first-lien term loan and $75 million asset-based lending revolving credit facility.

“We believe Cornell's strategy includes using INW as a platform to make additional third-party health and wellness manufacturing acquisitions because of underlying growth potential and significant market fragmentation. However, the capital raise and management attention required to effectively consolidate Bee Health and the pending acquisition will likely limit near-term acquisitions to small bolt-on deals,” S&P said in a press release.

The outlook is stable, reflects an expectation INW will continue generating satisfactory organic sales and profit growth. “Our base-case forecast is for FOCF of $20 million-$45 million annually over the next two years, adjusted leverage reduction to the low-5x area over the next year from 6x pro forma at close, and a pause on large acquisitions,” the agency said.

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