S&P: Hostess loans B+, CCC+

Standard & Poor’s said it affirmed the B corporate credit rating on Hostess Holdco LLC.

The agency also said it assigned B+ ratings to the company’s $100 million revolving credit facility due 2020 and $825 million first-lien term loan due 2022.

The 2 recovery rating indicates 70% to 90% expected default recovery.

S&P also said it assigned a CCC+ rating to the company’s proposed $400 million second-lien facility due 2023.

The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook is stable.

Hostess Brands LLC is recapitalizing and significantly increasing debt to fund a very large dividend.

The ratings reflect a view that Hostess can support the substantially higher debt leverage resulting from the proposed financing because of its demonstrated ability to grow its revenue, EBITDA and overall cash flows since its re-launch of the business during July 2013, S&P said.

The proceeds will be used to fund a $905 million dividend to existing shareholders, refinance its $344 million first-lien term loan and pay fees and expenses, the agency said.

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