S&P cuts KNB Holdings

S&P said it downgraded the ratings on KNB Holdings Corp. and its first-lien term loan to CCC from CCC+.

“The downgrade reflects our expectation for unsustainable leverage and weak cash flow due to continued high freight costs and supply chain constraints. During the third quarter ended Sept. 25, 2021, the company's revenue declined 10.5% compared with 2020, when comparable revenue grew by double digits as stores re-opened. Compared with the third quarter of 2019, comparable revenue increased 5.6%,” S&P said in a press release.

The agency noted that as of Sept. 25, KNB had only $23.5 million available on its $75 million asset-based lending facility and only $4.2 million of cash on its balance sheet. The company also had $20 million available on its $65 million accounts receivable factoring line.

The outlook is negative.

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