Moody's rates Otis Spunkmeyer loan B1

Moody's Investors Service said it assigned a B1 rating to Otis Spunkmeyer Inc.'s new $170 million senior secured term loan due 2012 and affirmed the company's existing senior secured credit facility ratings at B1 and its corporate family rating at B1.

The outlook remains stable.

Proceeds from the new $170 million term loan will be used to refinance Otis' existing $150 million term loan ($132.3 million outstanding) and for general corporate purposes, including possible acquisitions.

Moody's said Otis's ratings are supported by its dominant position in the foodservice frozen cookie dough category, where it enjoys a leading and growing market share, backed by an established distribution network and longstanding relationships with key foodservice providers. In the more fragmented foodservice muffin market, the company recently has improved its market position, currently maintaining a No. 2 share behind much larger Sara Lee.

Otis' ratings are limited, Moody's said, by its narrow product line (roughly 70% cookies, 25% muffins and 5% other), modest revenue base, high leverage and a weak balance sheet primarily due to the accounting effect of Code Hennessy & Simmons' purchase of the company in 2002.

© 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.