Moody's rates Hearthside loans B1, notes Caa1

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to Hearthside Group Holdings, LLC, B1 (LGD3, 36%) ratings to its new $100 million senior secured revolving credit facility and $575 million senior secured first-lien term loan and a Caa1 (LGD5, 87%) rating to its $270 million senior notes. The outlook is stable.

Proceeds of the new debt, along with a $329 million equity injection, will be used to finance the more than $1 billion acquisition of Hearthside by Goldman Sachs and Vestar Capital Partners from Wind Point Partners, including the repayment of existing debt.

The agency said Hearthside's B2 corporate family rating reflects the company's leading position as a grain-based contract manufacturer and packager of food products that has longstanding relationships with leading U.S. food companies, very good liquidity and limited commodity exposure due to pass-through cost arrangements.

In Moody's view, these positives are offset by adjusted pro forma leverage in the high 6 times range, significant concentration in top customers, thin margins as is typical for co-packers and an appetite for acquisitions that has fueled its growth in recent years.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.