Moody's may cut Michael Foods

Moody's Investors Service said it placed on review for possible downgrade Michael Foods, Inc.'s B1 corporate family rating, Ba3 (LGD3, 34%) ratings on its $75 million 3.5 year first-lien revolving credit agreement and $450 million senior secured term loans (A and B tranches) and B3 (LGD5, 78%) rating on its $150 million 8% subordinated notes due November 2013.

The downgrade review followed news that its parent, M-Foods Holdings, Inc., has entered into an agreement to be bought in a leveraged transaction by affiliates of Goldman Sachs Capital Partners. The transaction is valued at about $1.7 billion and will materially increase the total leverage of the company, Moody's said.

M-Foods' corporate family rating of B1, probability of default rating of B1 and B3 (LGD6, 92%) rating on its 9¾% senior discount notes due 2013 also were placed on downgrade review.

While certain current obligations will be repaid if the transaction goes through as planned, and these instrument ratings may ultimately be withdrawn, the review will focus on the likely weakening of credit protection measures going forward, which could put pressure on the corporate family and corporate default ratings as well as debt ratings not tendered, the agency said.

Given recent solid performance of the company, any downgrade of the corporate family rating would not likely exceed one notch, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.