S&P rates Del Monte loan add-on BB

Standard & Poor's said it assigned a BB bank loan rating with a recovery rating of 1 to Del Monte Corp.'s proposed $975 million add-on to its existing senior secured term loan facilities and affirmed the company's BB- long-term and B-1 short-term corporate credit ratings, BB- senior secured debt rating and B senior unsecured and subordinated debt ratings. The outlook is negative.

Proceeds will be used along with about $400 million of cash on-hand to fund the acquisitions of Milk-Bone brands from Kraft Foods Inc. for about $580 million and Meow Mix Holdings for $705 million.

S&P said the ratings reflect Del Monte's aggressive debt levels and the company's exposure to commodity pricing. Pro forma for both acquisitions, lease-adjusted total debt will be $2.4 billion, or around 4x EBITDA.

Partially offsetting these risk factors is the company's diverse product portfolio with leading market shares and high brand recognition in the stable domestic canned fruit and vegetable processing industry and pet food sector, the agency said.

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