S&P slices FFP Holdings Group

S&P said it lowered its ratings for FFP Holdings Group Inc. and its senior secured first-lien term loan to CCC from B-. The agency also cut the firm’s senior second-lien term loan to CC from CCC. The first-lien recovery rating remains 3 reflecting meaningful (50%-70%; rounded estimate: 55%) recovery in default and the second-lien rating is unchanged at 6 reflecting negligible (0%-10%; rounded estimate: 0%) recovery in default.

“Total cash and revolver availability as of Sept. 30, 2023, declined to $27 million from $47 million as of Dec. 31, 2022. The decline in liquidity was partially driven by facility consolidation costs and growth capital expenditures (capex), as well as some stock buybacks. FFP's high debt service requirements will limit its ability to generate cash over at least the next 12 months, and we expect an FOCF deficit of $7.5 million in 2024.

“We forecast the company will need to continue drawing on the revolver over the next year to fund working capital, capex and debt service. In addition, EBITDA cushion under its springing maximum first-lien net leverage ratio covenant has tightened to the low 20% percentage area,” S&P said in a press release.

The outlook remains negative.

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