S&P upgrades Atkins, rates loans BB-

S&P said it raised the corporate credit rating on Atkins Nutritionals Holdings II Inc. to B+ from B and assigned a B+ corporate credit rating to Atkins' new public parent company, the Simply Good Foods Co.

The outlook on both companies is stable.

The agency also said it assigned a BB- rating to Atkins' proposed $75 million revolving credit facility due in 2022 and $200 million senior secured term loan B due in 2024.

A2 recovery rating also was assigned to the debt, indicating 70% to 90% expected default recovery.

The proceeds from the debt offering and $403 million of cash from the Simply Good Foods and $100 million PIPE will be used to fund the acquisition, S&P said.

The agency said it will withdraw the existing corporate credit rating, issue-level rating and recovery ratings on Atkins Holdings II Inc. at the close of the transaction.

The upgrade reflects an expectation for financial policies to be managed less aggressively as a public company, including a debt-to-EBITDA ratio in the 3x to 4x range, S&P said.

The stable outlook reflects the company's favorable market position in the growing snack bar industry, which should support its ability to generate healthy free operating cash flows, the agency said.

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