S&P cuts Wells Enterprises

S&P said it downgraded its ratings on Wells Enterprises Inc. and its senior secured term loan due March 2025 to B from B+. The loan’s recovery rating remains 3, indicating an estimated recovery of 50% in default.

“Operating performance was below our expectations and credit metrics may remain pressured over the next 12 months. We project leverage will be above 8x at fiscal year-end 2022, which is above our prior expectation of 4.5x and above our 5x downgrade threshold for the B+ issuer rating. The operating underperformance is a result of packaging and ingredient cost inflation, which sequentially accelerated in Q2 2022 higher than our previous base-case expectations,” the agency said in a press release.

The outlook is negative.

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