Moody’s rates Manitowoc Foodservice loan B1

Moody’s Investors Service said it assigned initial ratings to Manitowoc Foodservice, Inc., including a corporate family rating of B2 and probability of default rating of B2-PD.

Moody’s also said it assigned B1 ratings to the company’s proposed $250 million five-year revolving credit facility and proposed first-lien $975 million seven-year senior secured term loan B.

Moody’s also assigned a speculative grade liquidity rating at SGL-2.

The outlook is stable.

The MTW Foodservice Escrow Corp. proposed $425 million senior unsecured notes also were assigned a Caa1 rating.

MTW Foodservice is expected to be merged into Foodservice upon the funding and consummation of the spin-off transaction as Manitowoc Foodservice will be the issuer going forward, Moody’s explained.

The proceeds from the proposed debt facilities will fund a dividend of about $1.4 billion to the Manitowoc Co. , Inc. as compensation for the Foodservice spin-off and fund its initial cash balance, financing fees and expenses, the agency said.

The ratings reflect an expectation for weak demand growth in Foodservice’s end market of commercial-kitchen equipment, which is likely to remain challenging into 2017, Moody’s said.

This is anticipated to result in continued lackluster organic revenue growth, the agency said.

Initial financial leverage is high given this business profile, Moody’s added.

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