Moody's cuts Gabe’s parent

Moody's Investors Service said it downgraded the parent of Gabriel Brothers, Inc. or Gabe’s, Mountaineer Merger Corp.'s corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and the company's senior secured first-lien term loan to Caa1 from B2.

"Although the acquisition of Old Time Pottery will be accretive to earnings and deleveraging, the combined company's pro forma leverage will still be high at around 4.5x's and coverage will remain weak at around 1x as a result of weaker than expected operating performance at Gabe's," said Mickey Chadha, a Moody's vice president, stated in a press release.

"Gabe's operating performance and credit metrics have been weaker than expected prior to the acquisition and the uncertain macro-economic environment and the constrained consumer coupled with integration risks are further risks to the downside," Chadha added.

Higher interest rates will also mean elevated borrowing costs for the company, the agency noted.

The outlook remains stable.

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