S&P rates CTI Foods loan B

Standard & Poor's said it assigned its B+ corporate credit rating to CTI Foods Holding Co. LLC and assigned its B rating and 3 recovery rating to CTI Foods' new $115 million second-lien term loan.

The outlook is stable.

Net proceeds from the second-lien term loan will be used improve financial flexibility, fund projects and pay a dividend to owners.

S&P said the ratings reflect CTI Foods' leveraged capital structure, modest scale of operations, and customer and supplier concentration.

Pro forma for the transaction, S&P estimates lease-adjusted total debt to EBITDA to be near 4.5x and lease-adjusted EBITDA coverage of interest to be about 2.3x for fiscal 2004. S&P said it expects some improvement in credit protection measures over time, largely because of the company's earnings growth from entering the soups, sauces, and bean markets.

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