S&P rates CTI loans B, CCC+

Standard & Poor's said it affirmed the B corporate credit rating on CTI Foods Holding Co. LLC.

The agency also said it assigned a B rating to CTI's proposed $345 million first-lien term loan due 2020. The recovery rating is 4, indicating 30% to 50% expected default recovery.

S&P also assigned a CCC+ rating to CTI's proposed $140 million second-lien term loan due 2021 with a recovery rating of 6, indicating 0% to 10% expected default recovery.

The outlook is stable.

The proceeds, along with about $215 million of equity, will be used to repay CTI's existing debt and equity and pay fees and other expenses associated with the acquisition transaction, S&P said.

Although the corporate credit rating and outlook on CTI remain unchanged at this time, the agency said it acknowledge that the proposed acquisition and recapitalization result in a very significant increase in leverage, including about doubling of reported debt, which weakens the company's credit metrics.

But, internally generated cash flow will enable CTI to restore these measures to pre-acquisition levels, S&P said.

The ratings reflect CTI's narrow product focus, limited geographical diversification, modest scale of operations and high customer concentration, the agency said.

The ratings also consider the company's substantial debt obligations, which will increase significantly as a result of the proposed acquisition, S&P said.

© 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.