S&P trims Wellness Pet

S&P said it lowered its ratings on Woof Intermediate Inc. (Wellness Pet Co.) to CCC+ from B- issue-level and the rating on its $889 million, with $872 million outstanding, first-lien term loan (pro forma for the $138.5 million incremental term loan funded in July 2023) to CCC+ from B-. It also trimmed the issue-level rating on the company's $235 million second-lien term loan to CCC- from CCC. The recovery ratings on the debt remain 3 and 6, respectively.

“We view the company's capital structure as unsustainable, absent a recovery in sales growth. Wellness Pet maintains a heavy debt load with roughly $1.1 billion in funded debt. We estimate S&P Global Ratings-adjusted pro forma leverage (including its incremental first-lien term loan funded in July 2023) was about 11.3x for the trailing 12 months ended July 1, 2023, compared with about 8.1x during the same period the previous year. S&P Global Ratings-adjusted EBITDA to interest also declined to 1.1x for the 12 months ended July 1 from 2.1x during the same period in 2022,” S&P said in a press release.

The agency said it estimates Wellness Pet’s credit metrics to improve from current levels by the end of fiscal 2023 but remain anemic, with leverage of about 9.6x in 2023 and 8.5x in 2024.

The outlook is negative.

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