Moody's cuts Del Monte Foods

Moody's Investors Service said it downgraded ratings of Del Monte Foods, Inc., including its corporate family rating to Caa2 from Caa1, probability of default rating to Caa2-PD from Caa1-PD, first-lien senior secured debt to Caa2 from Caa1 and speculative grade liquidity to SGL-4 from SGL-3. Finally, Moody's revised the outlook to negative from positive.

The rating actions stem from the company's unexpected cancellation of a proposed $575 million senior secured notes offering due to unfavorable market conditions caused by coronavirus-related disruptions. The previously assigned Caa2 instrument rating has been withdrawn.

The canceled notes offering was part of a proposed recapitalization designed to reduce financial leverage and address major near-term debt maturities, including its primary liquidity facility, which expires in November. As of the third quarter ended January, based on Moody's estimates and adjustments, debt/EBITDA was about 12.2x.

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