S&P lowers Del Monte loan, view to negative

Standard & Poor’s said it revised the outlook on Del Monte Foods Inc. to negative from stable.

The agency also said it affirmed the company’s B corporate credit rating.

The outlook revision follows the company’s weaker-than-expected operating performance in fiscal 2014 and first-quarter fiscal 2015, S&P said.

The negative outlook reflects a concern that the company may not be able to restore profitability and decrease leverage if it is unable to improve operating performance, the agency said.

S&P also said it revised the recovery rating to 3 from 2 and lowered the rating on the company’s first-lien term loan to B from B+.

The lower rating reflects a revised valuation of the company’s enterprise value given its recent weak operating performance and recently upsized asset-based revolver.

The 3 recovery rating indicates 50% to 70% expected default recovery.

S&P also said it affirmed the company’s CCC+ rating on the company’s second-lien term loan. The recovery rating remains at 6, indicating 0 to 10% expected default recovery.

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