S&P: Michelina's on watch

Standard & Poor's said it placed its ratings on Michelina's Inc., including the B+ corporate credit rating, on CreditWatch with negative implications.

The CreditWatch listing reflects weaker-than-expected year to date operating performance and an extremely limited cushion under credit facility covenants, the agency noted.

Year to date, EBITDA has declined 10% due to declining volume and catch-up spending on maintenance, S&P said, noting that, in addition, sales were negatively affected as a large co-pack customer shifted to store turn shipments from pipeline fill.

At Oct. 8, S&P said that Michelina's was in compliance with all covenants of its senior credit facility. However, cushion under the interest coverage covenant was very limited.

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