S&P: CSM Bakery unchanged

Standard & Poor’s said the B+ rating on CSM Bakery Solutions LLC’s senior secured first-lien term loan is unchanged after a proposed $157 million incremental addition to the term loan.

The recovery rating on the proposed $850 million first-lien term loan due 2020 is 2, indicating 70% to 90% expected default recovery.

In addition, the CCC+ rating on the company’s senior secured second-lien term loan is unchanged after a proposed $156 million incremental add-on.

The recovery rating on the proposed $306 million second-lien term loan due 2021 is 6, indicating 0 to 10% expected default recovery.

The proceeds from the incremental term loans, along with balance sheet cash, will be used to fund a €300 million shareholder dividend.

Following completion of the proposed transaction, CSM Bakery will have about $1.2 billion of total debt outstanding, S&P said.

The B corporate credit rating and stable outlook on CSM Bakery, which are unaffected by the transaction, reflect the company’s highly leveraged financial risk profile, the agency said.

The proposed $313 million of incremental term loans will increase CSM Bakery’s leverage in the near term, but credit measures are expected to improve over the next year, primarily on EBITDA growth, S&P said.

The ratings also reflect the company’s weak business risk profile, the agency said.

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