Moody's downgrades CSM Bakery

Moody's Investors Service said it downgraded ratings of CSM Bakery Solutions Ltd. and subsidiaries, including the corporate family rating to Caa2 from Caa1, probability of default rating to Caa2-PD from Caa1-PD, first-lien term loan rating to Caa1 from B3 and second lien-term loan rating to Caa3 from Caa2.

The outlook is stable.

The downgrades reflect continued weak operating performance and eroding liquidity, which has become inadequate due to approaching debt maturities and liquidity facility expiration, Moody's said.

The agency said it does not expect that the company will generate a meaningful amount of free cash flow over the next year.

In recent years, CSM has reported weak operating performance, especially in its North America business, which has not fully recovered from the effects of major enterprise systems disruptions that began in late 2015, Moody's said.

The ratings also reflect the company high financial leverage, low profit margin, inadequate liquidity and poor future earnings visibility, the agency said.

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