Moody's downgrades MVK

Moody's Investors Service said it downgraded MVK Intermediate Holdings, LLC's corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD. Moody's also downgraded the company's senior secured first-lien revolving credit facility and $335 million first-lien secured term loan to B3 from B2.

“The downgrade reflects Moody's view that fiscal 2020 earnings will be lower than previously expected, leading to low free cash flow and leverage that remains elevated. Moody's still projects that EBITDA will grow in 2020 but that hitting the prior forecast relies on a solid improvement in Q3 and Q4 earnings that Moody's no longer believes the company will be able to achieve given certain headwinds and factors,” Moody’s said in a press release.

The factors include a product recall related to a potential salmonella outbreak, and warm weather conditions, which are likely to hurt stone fruit harvest volumes, the agency said.

Moody's said it forecasts debt-to-EBITDA will exceed 7x in 2020 with only slightly positive free cash flow.

The outlook is stable.

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