S&P affirms Alphabet Holding

S&P said it affirmed its B- issuer credit rating on Alphabet Holding Co. Inc. The outlook is negative.

At the same time, the agency affirmed its B+ issue-level rating on the company's $350 million senior secured ABL due 2022, the B- issue-level rating on its $1.5 billion senior secured first-lien term loan due 2024 and the CCC issue-level rating on its $400 million senior secured second-lien term loan due 2025.

The recovery rating on the ABL remains 1, reflecting an expectation for very high (90% to 100%, rounded estimate: 95%) recovery in the event of a payment default. The recovery rating on the first-lien term loan remains 3, reflecting an expectation for meaningful (50% to 70%, rounded estimate: 50%) recovery in the event of a payment default. The recovery rating on the second-lien term loan remains 6, reflecting an expectation for negligible (0% to 10%, rounded estimate: 0%) recovery in the event of a payment default.

“The rating affirmation reflects our expectation that credit metrics will improve modestly over the next year, but remain very weak. It also incorporates our expectation for modestly negative free cash flow in fiscal 2019 due to strategic initiatives and further restructuring under new leadership,” S&P said in a news release.

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