S&P rates Flavors loans B, B-

Standard & Poor’s said it assigned a B corporate credit rating on Flavors Holdings Inc.

The agency also said it assigned a B rating to the company’s proposed $415 million first-lien facility, which consists of a $50 million revolving credit facility due 2019 and $365 million first-lien term loan due 2020.

The recovery rating is 3, reflecting 50% to 70% expected default recovery.

S&P said it also assigned a B- rating to the company’s proposed $75 million second-lien term loan due 2021. The recovery rating is 5, reflecting 10% to 30% expected default recovery.

The outlook is stable.

The proceeds from these facilities will be used for the acquisition of Merisant Co. and to refinance existing indebtedness at Mafco, the agency said.

The ratings reflect an assessment of the company’s pro forma debt-to-EBITDA ratio of close to 6x, relatively good combined company EBITDA margins in the low-20% range and a somewhat narrow product focus and low growth prospects, S&P said.

The combined company will continue to be concentrated in product categories exposed to the risk of secular product declines and intense product competition, the agency said.

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