Moody’s lowers Flavors, facilities

Moody's Investors Service said it downgraded Flavors Holdings Inc.'s corporate family rating to Caa2 from B3 and probability of default rating to Caa2-PD from B3-PD.

At the same time, the agency downgraded the first-lien revolver and first-lien term loan to Caa2 from B3, and second-lien term loan to Ca from Caa2.

The outlook is negative.

Moody’s said the downgrade reflects its concern regarding the sustainability of Flavor's capital structure in light of its poor operating performance and weak liquidity.

“Moody's is concerned that Flavors will have difficulty remaining in compliance with its bank covenants, and will require covenant relief in the near-term,” the agency said in a news release.

“Additionally, Moody's is concerned that unless operating performance meaningfully improves, Flavors' capital structure will become unsustainable. This could induce the company to pursue a transaction that Moody's would consider a distressed exchange, and hence a default.”

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