S&P nicks City Brewing

S&P said it lowered its ratings for City Brewing Co. LLC and its $850 million senior secured term loan to B- from B. The agency also revised the outlook to negative from stable.

“Ongoing operating challenges will likely weigh on financial performance into 2023. Labor and supply chain disruptions along with softer than expected demand for hard seltzers continue to pressure City Brewing's top and bottom line. Labor shortages have weakened the company's capacity utilization rates and operating efficiency. The supply chain also remains challenged, primarily due to difficulties accessing packaging materials and some key ingredients that are shortening line runs,” the agency said in a press release.

S&P noted City Brewing’s S&P Global Ratings' adjusted leverage was close to 14x for the trailing 12-month period ended June 30 and forecasts it will remain high–around 10x–at the end of fiscal 2022.

The outlook reflects the possibility of a downgrade unless volumes rebound and if in the agency’s view City Brewing’s capital structure is unsustainable, S&P said.

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