DBRS rates AGT notes BB (low)

DBRS Ltd. said it confirmed the issuer rating of AGT Food & Ingredients Inc. at B (high) and assigned a provisional rating of BB (low) to the company’s proposed issuance of C$175 million of senior unsecured notes, with a recovery rating of RR3.

Proceeds from the proposed issuance of new senior unsecured notes are expected to be used to fully redeem all of the company’s outstanding senior secured high-yield notes on or around Feb. 14, as well as to repay amounts drawn on the company’s credit facilities held at Alliance Pulse Processors Inc.

The RR3 recovery rating on the senior unsecured notes assumes the full repayment of the outstanding senior secured high-yield notes, at which time, upon the closing of the redemption in early 2017 of the senior secured high-yield notes, the associated rating will be discontinued-repaid, the agency said.

DBRS said AGT’s issuer rating continues to be supported by its market position in global pulses, diversification (geography, supplier and customers) and favorable industry trends. The rating also reflects volatility in input costs, sensitivity to weather and growing conditions, the low-margin and capital-intensive nature of AGT’s core business, competition and risks associated with the company’s growth, DBRS added.

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