S&P raises KeHE Distributors

S&P said it raised all its KeHE Distributors Holdings LLC’s ratings by a notch, the including issuer credit rating to B+ from B, the asset-based lending revolver rating to BB from BB- and the second-lien secured notes rating to B from B-.

“The upgrade reflects KeHE's improving credit metrics and its less aggressive acquisition strategy. Like many essential retailers, KeHE has experienced strong positive results amid the Covid-19 pandemic with sales growth of about 14% in fiscal 2021,” S&P said in a press release.

“Despite higher working capital in 2021, the company also used its excess cash flow to repay debt, redeeming 10% of its outstanding second-lien notes at a premium earlier this year. As a result, adjusted debt to EBITDA improved to 4.9x as of the end of fiscal 2021 (May 2, 2021) with about $400 million borrowed against its revolver,” the agency added.

The outlook is stable.

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