Moody’s cuts Nature's Bounty, loans

Moody's Investors Service said it downgraded Clover Merger Sub, Inc.'s (Nature's Bounty Co.) corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

The agency also downgraded the company’s senior secured asset-based lending revolving credit facility to Ba2 from Ba1, first-lien senior secured term loan to B3 from B1 and second-lien secured term loan to Caa2 from Caa1.

Subsequently, the corporate family rating and probability of default rating will be withdrawn from Clover Merger Sub and assigned at Alphabet Holding Co., Inc. Nature's Bounty was a subsidiary of Clover Merger Sub that was assumed by Alphabet.

The outlook is negative.

Moody’s said the downgrade of the corporate family rating reflects meaningful downward revenue and earnings pressure, including the loss of distribution for some key products at Wal-Mart.

Thus, the agency said it believes that significant reductions in leverage will not be forthcoming.

With weaker earnings, Moody's expects adjusted debt to EBITDA to remain above 7.5 times for the next 12 months.

The negative outlook reflects the agency’s uncertainty regarding Nature's Bounty's ability to stabilize revenue declines quickly given the distribution losses and ongoing competitive industry pressures.

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