S&P cuts CSM Bakery Solutions

S&P Global Ratings said it lowered its corporate credit rating on CSM Bakery Solutions LLC to CCC+ from B. The outlook is negative.

At the same time, S&P lowered the ratings on the company's $850 million first-lien term loan due in 2020 to CCC+ from B+ and $210 million senior secured second-lien term loan due in 2021 to CCC- from CCC+. The 3 recovery rating (revised from 2) on the first-lien term loan indicates an expectation for meaningful (upper half of the 50%-70% range) recovery in the event of a payment default. The 6 recovery rating on the second-lien term loan indicates an expectation for negligible (0%-10%) recovery.

“Our downgrade reflects the company's constrained liquidity position from continued weakened profitability due to elevated costs and inventory mismanagement from the rollout of enterprise software in North America. The company has entered into a term loan agreement with its financial sponsor owners Rhone Capital at an annual rate of 15% to improve its liquidity position,” S&P said in a news release.

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