S&P rates Hostess loan B-

Standard & Poor's said it assigned a B- corporate credit rating to Hostess Holdco LLC, along with a B- rating to its subsidiary New HB Acquisition LLC's proposed $500 million senior secured term loan due 2020.

The recovery rating is 3, indicating 50% to 70% expected default recovery.

The outlook is stable.

Hostess, a newly formed company, is owned by investment funds affiliated with Apollo Global Management LLC and Metropoulos & Co., which recently won approval to buy a majority of the Hostess snack cake assets out of bankruptcy court, S&P said.

The ratings consider that certain Hostess Brands Inc. assets are being sold free and clear of existing material liabilities, including any existing employee-related expenses such as pension and post-retirement benefit obligations, the agency said.

Hostess will use proceeds from the new $500 million term loan, along with roughly $192 million of common equity from Apollo Management and Metropoulos & Co., to fund the purchase of the Hostess Brands Inc.'s snack cake assets for $410 million, $250 million to restart the business and $32 million for fees and expenses, S&P said.

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