S&P rates Advance Food loans B+, B-

Standard & Poor's said it assigned a B+ corporate credit rating to Advance Food Co., a B+ rating with a recovery rating of 2 to the company's proposed $250 million first-lien senior secured credit facility and a B- rating with a recovery rating of 5 to its proposed $65 million second-lien term loan facility.

The total bank facilities will consist of a $40 million first-lien revolving credit facility due 2012, a $160 million first-lien term loan due 2014, a $50 million first-lien add-on term loan due 2014 and a $65 million second-lien term loan facility due 2014. Pro forma for the transaction, S&P estimates that the 2006 lease-adjusted total debt-to-EBITDA ratio will be between 4.6x and 5.6x.

The outlook is negative.

Proceeds from the bank facilities will primarily be used to fund a shareholder dividend, refinance existing debt, to finance capital expenditures relating to the completion of a new manufacturing facility and for general corporate purposes.

The agency said the ratings reflect Advance Food's highly leveraged capital structure, aggressive financial policy, high customer and supplier concentration and narrow business focus.

These factors are partially mitigated by the company's leading position in its niche markets and existing long-term relationships with its distributors and end users, S&P said.

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