S&P rates AdvancePierre loans B, CCC+

S&P said it placed the B corporate credit rating on AdvancePierre Foods Inc. on CreditWatch with positive implications.

The agency also said it assigned a B rating to the company’s proposed $1.1 billion first-lien term loan due in July 2023 with a 4 recovery rating, indicating 30% to 50% expected default recovery.

S&P also said it assigned a CCC+ rating to the company’s proposed $200 million second-lien term loan due in October 2020 with a 6 recovery rating, indicating 0 to 10% expected default recovery.

The agency also said it placed both of these issue-level ratings on CreditWatch with positive implications.

The company is addressing its near-term refinancing risk with a proposed term loans and an initial public offering, which may lower leverage if the company successfully completes the transactions, S&P said.

AdvancePierre is narrowly concentrated in the value-added protein segment of the highly competitive packaged food industry, especially within the cyclical foodservice distributor channel, which is subject to consumer discretionary spending, the agency said.

Better pricing discipline, improved operating efficiencies and product mix have helped the company improve its profitability and cash flows by reducing its exposure to volatile commodity costs, primarily beef, S&P said.

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