Moody’s downgrades KC Culinarte

Moody’s Investors Service said it downgraded ratings of KC Culinarte Intermediate, LLC (Kettle Cuisine), including the company’s corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD, and first-lien senior secured debt rating to B2 from B1. The agency revised the outlook to negative from stable.

“The rating downgrades reflect sustained high financial leverage, initially related to acquisitions that likely will increase further during 2020 and be sustained at elevated levels for the foreseeable future. This is due mainly to severe incremental negative effects from the coronavirus, including closures and volume reductions at foodservice customers that we anticipate will persist for several quarters,” Moody’s said in a press release.

Moody’s said it sees debt/EBITDA, which had been sustained at over 7x before the coronavirus pandemic took hold in March, likely to rise into the teens in fiscal 2020 (ending in September) before improving, and will likely exceed 9x in fiscal 2021.

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