S&P rates Health and Happiness notes BB

S&P said it affirmed its BB+ long-term issuer credit rating on Health and Happiness (H&H) International Holdings Ltd. and BB issue rating on its senior secured notes.

At the same time, the agency assigned a BB issue rating to H&H's proposed U.S. dollar-denominated senior second-lien secured notes.

The outlook is stable.

Health and Happiness' margins will decline and working capital needs will increase while H&H ramps up its new pet-nutrition business, S&P said. This follows the mostly debt-funded purchase of Zesty Paws, the latest of two U.S.-based acquisitions in the past year.

“We expect the China-based nutrition and supplements firm to delever relatively quickly over the next 12-18 months from a sales recovery in baby nutrition, higher sales growth at the new pet food segment, and good cash flow generation,” S&P said in a news release.

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