S&P gives Knowlton Development B-

S&P said it gave Knowlton Development Corp. Inc. a B- issuer rating. Concurrently, the agency removed all its Knowlton Development Holdco ratings from CreditWatch with positive implications and affirmed its B- issuer rating and the 3 recovery rating on the term loan it co-issued with KDC US Holdings Inc. The 3 rating reflects meaningful (50%-70%; rounded estimate: 50%) recovery in an event of default.

The removal of the ratings from positive watch follows KDC Holdco withdrawing its planned IPO, the agency said. The company is now amalgamated with Knowlton Development Corp.

“The company's EBITDA and credit metrics (S&P Global Ratings' adjusted) for fiscal 2021 (ended April) and the last 12 months (LTM) ended July 31, 2021, were lower relative to our previous expectations. Even though revenues exceeded our expectations, EBITDA underperformed. The key factors contributing to weaker-than-expected EBITDA performance were higher-than-expected operating costs, namely supply chain-related issues; and labor,” S&P said in a press release.

The outlook is negative.

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