Moody's rates Matterhorn loans B2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Matterhorn Merger Sub, LLC.

Matterhorn is the legal entity that will acquire H-Food Holdings, LLC, parent company of Hearthside Group Holdings, LLC.

Moody's also said it assigned a B2 (LGD 3) rating to Matterhorn's proposed $150 million first-lien revolving credit facility and $1.12 billion first lien term loan.

The outlook is stable.

The company also plans to issue up to $375 million of unsecured debt as part of this transaction, Moody's noted.

The proceeds will be used by Matterhorn to purchase H-Food Holdings and repay existing debt, the agency said.

Matterhorn will be merged into H-Food Holdings with H-Food being the surviving entity, Moody's said.

The ratings reflect the company's high financial leverage and significant customer concentration with its two primary customers representing about half of its sales and a significant portion of earnings, the agency said.

The ratings also consider risks from leveraged acquisitions and aggressive shareholder returns, given its financial sponsor ownership, Moody's said.

But the company is in a good position as a contract manufacturer and packager of food products with longstanding relationships with leading U.S. food companies and limited commodity exposure, the agency said.

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