S&P affirms Sunny Delight

Standard & Poor's said it affirmed its B+ corporate credit rating, B+ senior secured bank loan rating and other ratings on Sunny Delight Beverages Co. The outlook is negative.

Sunny Delight has agreed to sell its Punica assets to PepsiCo Inc. (A+/stable/A-1) after which it will use about $144.5 million of proceeds to repay in full its $85 million second-lien term loan and repay $59.5 million of its $170 million first-lien term loan, thereby reducing the balance on this loan to $105 million. Sunny Delight will also pay an approximate $20 million distribution to the company's owners.

These actions are subject to approval of a first amendment to the credit facility. The ratings on the second-lien term loan will be withdrawn upon the close of the transaction.

S&P said the ratings on Sunny Delight reflect its narrow product portfolio and limited size within the highly competitive and somewhat fragmented global juice industry. S&P noted Sunny Delight's operating performance on its existing business has not met S&P's prior expectations due to higher-than-expected raw material costs and lower volume. As a result, operating margins pro forma for the sale are also weaker than expected at less than 10% forecast for 2005.

However, given the expected reduction in debt, credit measures have improved, despite the softer-than-anticipated operating performance, the agency said.

© 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.