Moody's alters Sovos Brands view to stable

Moody's Investors Service said it assigned B2 ratings to Sovos Brands Intermediate, Inc.’s planned $125 million revolving credit facility and proposed $580 million senior secured first-lien term loan.

The B3 ratings on the company's $45 million senior secured first-lien revolving credit facility and $380 million senior secured first-lien term loan are unaffected and will be withdrawn at closing. The outlook was revised to stable from positive.

Term loan proceeds and proceeds from an unrated $200 million second-lien term loan will be used to refinance the $380 million term loan and fund a shareholder distribution, along with associated transaction fees and expenses.

Moody's changed the outlook to stable reflecting the significant increase in pro forma debt-to-EBITDA leverage to 7.3x from 3.5x as of March 31, 2021.

“The shareholder distribution is credit negative as it materially increases the company's LTM leverage and reflects an aggressive financial policy,” the agency said in a press release.

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