S&P cuts K&N Parent

S&P said it downgraded K&N Parent Inc.’s first-lien term loan and revolver to B- from B and the second-lien term loan to CCC- from CCC. The agency also downgraded the company to CCC+ from B-. S&P placed the ratings on CreditWatch with negative implications.

“The downgrade reflects our view that K&N's operating prospects are substantially worsened by the coronavirus pandemic following a weak 2019 marked by ongoing product mix and cost management challenges. Margins and cash flow have been burdened by a number of company initiatives. These include the launch of new products, geographic growth initiatives, and a major investment to move operations from California to Texas,” said S&P in a press release.

The CreditWatch placement reflects at least a 50% chance S&P could lower the ratings at least by one notch due to a potential breach of its credit agreement requirement the sponsor adds additional capital of $12 million by March 31.

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