Moody's assigns Monogram Food B2

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD Probability of default rating to Monogram Food Solutions, LLC. Moody's also assigned B2 ratings to the company's expected $100 million senior secured first-lien revolving credit facility and $435 million senior secured first-lien term loan.

Investment firm PPC Investment Partners LP and co-investors plan to buy a controlling stake in Monogram Food. The transaction, valued at $1 billion, will be funded with the first-lien term loan and common equity, both rollover and new investment, that will also be used to refinance debt. Pro forma for the transaction and the June 2021 acquisition of Quality Food Processors, Moody's adjusted debt to EBITDA will be about 5.8x as of the last 12 months ending May 1, the agency said.

“The assigned ratings reflect the company's good customer relationships with large consumer packaged food companies, good channel diversification, and good industry trends with increasing co-pack manufacturing by branded companies. The CFR also reflects the company's high financial leverage, acquisition business risks and ownership by a group of investors led by Pritzker Private Capital,” Moody’s said in a press release.

The outlook is stable. “Moody's expects that over the next 12 to 18 months debt to EBITDA will remain high at around 5.25x as the company continues to focus on capacity expansion and automation that will drive elevated capital spending in 2021 and 2022,” the agency said.

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