S&P rates Shearer’s loan B-

S&P said it assigned a B- rating and 3 recovery rating to Shearer’s Foods LLC’s planned $985 million first-lien loan and a CCC rating with a 6 recovery rating to its proposed $340 million second-lien loan

Proceeds will be used to repay debt, pay a dividend and cover fees.

“We will withdraw the issue-level ratings on the existing first- and second-lien term loans when this transaction closes,” S&P said in a press release.

“As a result of the transaction, we estimate pro forma leverage (excluding preferred stock) will rise to about 7.1x for the 12 months ended June 27, 2020, from 5.4x. While the company's operating performance has improved during the past year and snacking trends remain favorable, the increase in leverage (excluding the preferred) from the dividend has resulted in our affirmation of the B- issuer credit rating and a revision of the outlook to stable from positive,” S&P said.

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