Moody’s drops Candy Intermediate, loan to B3

Moody's Investors Service said it downgraded Candy Intermediate Holdings, Inc.’s corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

Candy Intermediate is a wholly owned subsidiary of Ferrara Candy Co. Holdings, Inc.

As a result, the company's $535 million principal first-lien term loan due 2023 was downgraded one notch to B3 from B2.

The outlook was changed to negative from stable.

Moody’s said the downgrade of the corporate family rating is largely driven by the relatively rapid deterioration in credit metrics that occurred during the company's fiscal fourth quarter and Moody's expectation that metrics will remain challenged through at least the first half of fiscal year 2017 before improving thereafter.

“The downgrade also incorporates Moody's expectation that the company will maintain an adequate liquidity profile supported by its $150 million ABL facility. Moody's expects that the facility will be more than two-thirds drawn for much of the year owing to the company's peak working capital season spanning the May to September timeframe prior to being partially paid down by FYE17 when net working capital requirements ease,” the agency said in a news release.

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