S&P rates Shearer's notes B

Standard & Poor's said it assigned a B rating to Shearer's Foods Inc.'s proposed $210 million senior secured notes due 2019.

The recovery rating is 4, indicating 30% to 50% expected recovery in a default.

The agency also said it understands that the company will enter into a new asset-based revolving credit facility for up to $50 million due 2017, which is unrated.

The notes rating is not on CreditWatch, but is dependent on a successful completion of the company's proposed recapitalization and buyout transaction, S&P said.

The CCC+ corporate credit rating on Shearer's remains on CreditWatch with positive implications, the agency added.

Following the successful completion of this recapitalization and buyout transaction, S&P said it anticipate raising the corporate credit rating two notches to B and removing this rating from CreditWatch.

The ratings on the company's existing $139 million senior secured credit facilities due 2015 remain unchanged and on CreditWatch.

The ratings reflect Shearer's narrow product focus, relatively high customer concentration and exposure to volatile commodity costs, S&P said.

The proceeds, along with about $142 million of new preferred stock and about $3 million of common stock, will be used to fund the purchase of the company, to repay about $169 million of existing debt and to pay related fees and expenses, the agency said.

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