Moody's rates Brakes notes B3

Moody's Investors Service said it assigned a provisional Caa1 corporate family rating to Cucina Acquisition UK, the parent of Brakes Group, and a provisional B3 rating to £200 million of senior secured notes due 2018 to be issued by Brakes Capital. The outlook is stable.

The note proceeds will make up the facility E1 loan to Cucina Acquisition UK, which in turn will partly refinance existing senior bank debt of Cucina Acquisition UK. The company will also enter into a new £75 million revolving credit facility. Brakes was acquired by Bain Capital in June 2007.

The agency said the Caa1 corporate family rating reflects Brakes' high pro forma adjusted leverage ratio, above 8x at year-end 2013; relative lack of scale in a low-margin industry; high degree of customer concentration; weak free cash flow generation for the foreseeable future; high competitive intensity in its core markets, particularly in the United Kingdom; and low geographic diversification of revenues.

More positively, the rating also reflects Brakes' significant footprint in the foodservice distribution industry, initiatives implemented to turn around the business, improved debt maturity profile assuming a successful refinancing, strong brand recognition and longstanding relationship with customers, Moody's said.

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