S&P rates Hearthside loans B, CCC+

S&P said it affirmed its B corporate credit rating on Hearthside Group Holdings LLC and revised the outlook to negative from stable.

At the same time, the agency assigned a B corporate credit rating to parent H-Food Holdings LLC. The outlook is negative.

S&P assigned a B issue-level rating to the proposed senior secured credit facility that is composed of a $150 million undrawn revolver due 2023 and a $1.12 billion term-loan due 2025. The 3 recovery rating indicates an expectation for meaningful (50%-70%, rounded estimate 55%) recovery in the event of a default.

The agency also assigned a CCC+ issue-level rating to the proposed $375 million senior notes due 2026. The 6 recovery rating indicates negligible recovery (0%-10%, rounded estimate 0%).

S&P said it will withdraw the corporate credit rating on Hearthside at the close of the transaction and maintain the ratings going forward at H-Food.

“Our ratings affirmation reflects our expectation for Hearthside to reduce leverage towards 7x over the next 12 months as the company realizes productivity savings, synergies and earnings from a new plant and customer,” the agency said in a news release.

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