Moody's alters CHG PPG trend to negative

Moody's Investors Service said it changed the outlook for CHG PPC Parent LLC (C.H. Guenther) to negative from stable.

““The outlook revision to negative from stable reflects that CHG faces challenges to reducing leverage and improving free cash flow to levels in line with Moody's expectation for the rating. Moody's anticipates that CHG's operating performance in the next 12 to 18 months will be weaker than previously expected as a result of inflationary pressures and supply chain headwinds, which factors have led to elevated debt/EBITDA leverage of 6.9x for the LTM period ended June 25, 2022 (on a Moody's adjusted basis, and pro forma for the Nov. 21, 2021, acquisition of Baldinger and Bagos bakeries), which is high for the B2 CFR given the company's operating profile,” the agency said in a press release.

Additionally, the agency said it forecasts CHG’s free cash flow for the fiscal year to end March 2023 to be negative, and that higher interest rates will tax the company’s cash flow given that its about $1.4 billion term loan is floating rate.

Moody’s concurrently affirmed the issuer’s ratings, including the B1 rating on the company's first-lien senior secured debt, which includes a $250 million revolver due 2026, a €190 million term loan due 2025, and a $910 million term loan due 2028. The $289 million second-lien term loan is not rated.

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