Moody's lowers Merisant PDR to D

Moody's Investors Service said it lowered Merisant Worldwide, Inc.'s probability-of-default rating to D from Ca following the company's announcement that it filed for voluntary bankruptcy under Chapter 11 along with its affiliates.

The agency affirmed Merisant Worldwide's corporate family rating at Ca and $137 million 12¼% senior subordinated discount notes due 2014 at C (LGD6, 90%) as well as Merisant Co.'s senior secured revolving credit due January 2009, senior secured term loan A due January 2009 and senior secured term loan B due January 2010 at Caa1 (LGD2, 16%) and its $225 million 9½% senior subordinated notes due July 2013 at Ca (LGD4, 63%).

The outlook is stable. The ratings will soon be withdrawn.

Moody's noted that Merisant has not been able to refinance its revolving credit agreement and term loan A, which mature on Jan. 11; global competition from well-capitalized Splenda has eroded sales and market share over the past several years; for the 12 months ended Sept. 30, the debt-to-EBITDA ratio was unsustainable at about 25 times; and the company's weak credit metrics have severely limited its financial flexibility.

However, Merisant does have growth prospects with the recently launched PureVia, the agency said. Given the potential for PureVia to offset the decline in Merisant's aspartame-based sweeteners, Moody's anticipates that recovery levels in any default would be average.

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