S&P rates Rising Tide loans CCC, CC

S&P said it rated Rising Tide Holdings Inc.’s (West Marine) 1A first-lien term loan CCC with a 3 recovery rating. The agency also assigned the other new debt facilities, including the 1B and 2A term loans, CC with 6 recovery ratings. Concurrently, S&P upgraded Rising Tide’s issuer rating to CCC from SD, selective default.

“Rising Tide's capital structure remains unsustainable because of its heavy debt load and operating performance uncertainty amid a slowing economy. We still see significant risks over the next 12 months despite the company avoiding a broader restructuring with its recently completed debt exchange.

“Rising Tide's ability to generate significant sales growth and profitability remain uncertain amid our expectation for an economic contraction and persistent inflation. This economic volatility could lead to less consumer spending on boating products and more on essentials. We hold this view despite projecting a rebound in sales this year following a more than 6% decline last year,” S&P said in a statement.

The company finished its debt exchange on Feb. 28, when it restructured its $394 million first-lien term loan ($120 million first-lien term loan held by the sponsor, L Catterton) and $120 million second-lien term loan facility. All debtholders participated in the exchange.

The outlook is negative.

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