S&P affirms KNEL after add-on, amendment

Standard & Poor’s said it affirmed the B corporate credit rating on KNEL Acquisition LLC.

The agency also said it affirmed the B ratings on the company’s senior secured A-1 and A-2 first-lien term loans following news of the company’s proposed $50 million add-on and proposed amendment to the term loan and revolving credit facility credit agreement.

The 3 recovery rating on the term loans and $65 million revolving credit facility due 2019 are unchanged, indicating 50% to 70% expected default recovery.

S&P also said it affirmed the CCC+ rating on the company’s $73 million A-1 and A-2 second-lien credit facilities due 2022. The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook is stable.

The proceeds, as well as cash on the balance sheet, will be used to fund the acquisition of certain production assets, inventories and contracts associated with NBTY Inc.’s nutritional bar and powder manufacturing operations.

The ratings reflect a view that the NBTY asset acquisition will enhance KNEL’s bar and functional powder manufacturing scale, S&P said.

The company plans to phase in transition costs related to the acquisition through 2016, the agency said.

Leverage is expected to remain at more than 6x in 2015 because of the increased debt levels and the company is not expected to realize the full earnings benefit of this transaction until 2017, S&P said.

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