Moody’s ups, withdraws DS Services

Moody's Investors Service said it upgraded the ratings for DS Services of America, Inc.'s $350 million second-lien notes to Ba3 from B3 based on Cott Corp.'s guarantee following the completion of the acquisition of DSSA by Cott (B2 stable).

Other DS Services ratings were withdrawn, including the corporate family rating, probability of default rating, first-lien term loan rating, which was repaid, and speculative grade liquidity rating.

Cott acquired DS Services’ parent company, DSS Group, Inc., on Dec. 12 for about $1.25 billion including the assumption of DS Services’ second-lien debt, consisting of $350 million notes due 2021.

Cott and its subsidiaries guarantee the second-lien notes. Based on the guarantee, they have become secured obligations of Cott on a second-lien basis behind Cott's existing first-lien debt but ahead of substantial senior unsecured debt. As such, the notes are expected to benefit from an increased secured asset pledge relative to when the notes were a part of DS Services’ capital structure, Moody’s said.

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