S&P trims Sierra Enterprises

S&P said it lowered its ratings on Sierra Enterprises LLC and its first-lien senior secured revolving credit facility and term loan due 2024 to CCC+ from B-. The 3 recovery rating on the facilities remains unchanged, indicating meaningful recovery (rounded estimate: 60%) in default.

“Sierra's capital structure is unsustainable, and an operating rebound has yet to take hold because of continued input-cost inflation. The company's debt to EBITDA for the 12 months ended June 30, 2022, increased to well over 20x, from 10x a year earlier, because its year-to-date gross margins contracted by 460 basis points (bps) year over year and led to an operating loss,” S&P said in a press release.

The agency said it does not see any improvement that would support an upgrade until fiscal year 2024.

The outlook is negative.

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