S&P: KNEL unchanged after increased add-on

Standard & Poor’s said the ratings on KNEL Acquisition LLC are unchanged following the company’s $10 million proposed increase to its previously announced $50 million add-on to its existing $125 million term loan A-1 due in 2021.

The recovery rating also remains at 3, indicating 50% to 70% expected default recovery.

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, S&P said.

The company’s weak business risk profile reflects KNEL’s customer concentration, participation in the fragmented co-manufacturing segment of the highly competitive North American packaged-food industry and narrow product focus, the agency said.

S&P said it believes leverage will remain at more than 6x during the next 12 months, but credit-protection measures will improve with excess cash flow applied to debt reduction.

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