TEXT-S&P raises Bellisio Foods issue-level ratings to 'B+'
Dec 4 - Standard & Poor's Ratings Services raised its issue-level ratings on Bellisio Foods Inc.'s $200 million senior secured credit facilities, which consist of a $30 million revolving credit facility due 2016 and $170 million term loan due 2017, one notch to 'B+' from 'B'. We revised the recovery rating to '2', indicating our expectations for substantial (70% to 90%) recovery in the event of a payment default, from '3'. The recovery rating revision reflects the company's debt prepayment on its term loan during the first nine months of fiscal 2012, which we believe has improved the recovery prospects for this credit facility given the reduced amount of debt outstanding. We estimate at Oct. 7, 2012 the company had about $160 million outstanding on its term loan and total adjusted debt outstanding of roughly $234 million, including a $10.5 million earn-out contingent liability. The 'B' corporate credit rating on Bellisio Foods remains unchanged. In addition to the debt prepayment, the company's operating performance has improved, with EBITDA growth of over 15.5% for the first nine months of fiscal 2012 from the same prior-year period. We estimate that adjusted leverage was roughly 3.9x for the 12 months ended Dec. 31, 2012 as compared with nearly 4.5x at December 2011, after the transaction. "The rating action for Bellisio's credit facilities follows our review of our issue-level ratings on Bellisio Foods' senior secured credit facilities following release of the company's third-quarter results," said Standard & Poor's credit analyst Bea Chiem. The ratings on Bellisio Foods Inc. reflect our view of the company's financial risk profile as "highly leveraged" and its business risk profile as "vulnerable." Bellisio remained highly leveraged following its 2011 purchase by Centre Partners, although leverage has begun to decline in 2012 and we expect further improvement in credit measures. Key credit factors considered in our vulnerable business risk assessment include our view of Bellisio's narrow product portfolio, participation in the highly competitive frozen food category, exposure to volatile commodity costs, relatively limited operating scale, and limited customer and geographic diversity. For the recovery analysis, see our recovery report on Bellisio, to be published on RatingsDirect following this release. Alternate contact for Rick Joy: (1) 973-943-5794. RATINGS LIST Bellisio Foods Inc. Corporate credit rating B/Stable Upgraded; Recovery Ratings Revised Senior secured To From $30 million revolving credit facility due 2016 'B+' 'B' Recovery rating '2' '3' $170 million term loan due 2017 'B+' 'B' Recovery rating '2' '3' RELATED CRITERIA AND RESEARCH -- Corporate Ratings Criteria 2008, April 15, 2008 -- Recovery: Criteria Guidelines for Recovery Ratings on Global Industrials Issuers' Speculative-Grade Debt, Aug. 10, 2009 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.