Moody's rates Clement Pappas loan B2

Moody's Investors Service said it assigned a B1 corporate family and probability-of-default ratings to Quebec LP, a subsidiary of Lassonde Industries, Inc.

The company is expected to execute a $230 million term loan that will be used to partially fund Lassonde's proposed acquisition of Clement Pappas and Co., Inc.

Moody's also assigned a B2 (LGD4, 59%) rating to its proposed $230 million senior secured term loan due 2017.

The outlook is stable.

Lassonde plans to acquire Clement Pappas for $390 million or about 6.5x trailing EBITDA. The acquisition is expected to be funded with proceeds from the proposed term loan, borrowings on its proposed $50 million asset-based revolving credit facility due 2016 (unrated) and with proceeds from equity contributions made by Lassonde and members of both the Lassonde and Pappas families.

The B1 corporate family rating reflects Clement Pappas's small scale, high leverage, at 4.3x projected debt-to-EBITDA at close, and its limited category diversification as it is focused solely on the private label, shelf stable juice and non-CSD beverage category, the agency said.

Moody's said it expects meaningful debt reduction over the next two years and that the conservative balance sheet management exhibited by both legacy Clement Pappas and Lassonde to be reestablished once acquisition related debt has been reduced.

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