S&P cuts Weber, rates loan B+

S&P said it rated Weber Inc.’s $250 million incremental term loan B+ with a 3 recovery rating. Concurrently, the agency trimmed Weber’s issuer and secured debt ratings to B+ from BB- and BB, respectively, and revised the recovery rating to 3 from 2. Moody’s also revised the outlook to developing from stable.

“The downgrade reflects Weber's elevated leverage primarily due to ongoing supply chain challenges, high input-cost inflation, and elevated working capital borrowings. In the first fiscal quarter (ended Dec. 31, 2021), Weber's S&P Global Ratings-adjusted EBITDA declined to a loss of $46 million from positive EBITDA of about $34 million during the same prior-year quarter, as the company faced significant supply chain disruptions,” S&P said in a press release.

Weber will use the proceeds to improve its liquidity position. “Because of the weak first fiscal quarter and this additional debt, we estimate pro forma leverage will increase to the high-6x area from about 4x as of Sept. 30, 2021,” the agency said.

The outlook reflects the possibility S&P could affirm, raise or lower Weber’s ratings depending on its ability to manage its supply chain challenges and restore profitability in the second half of the year while maintaining sufficient liquidity through the completion of the upcoming debt issuance and adequate availability on its revolver, the agency said.

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