S&P prunes Arterra Wines

S&P said it lowered its ratings on Arterra Wines Canada Inc. and its first-lien term loan to B- from B. The loan’s 3 recovery rating is unchanged.

“The downgrade reflects our expectation that credit metrics will remain elevated through fiscal 2024. Arterra's fiscal 2023 revenues and S&P Global Ratings-adjusted EBITDA declined year over year as the company's volume sales were affected by lower foot traffic in company-operated retail stores. The operational performance deterioration resulted in an increase in leverage to 14x (8x excluding shareholder loans and NCE) as of year-end fiscal 2023,” the agency said in a statement. NCE is noncommon equity.

Additionally, S&P said it sees leverage hovering in the low-14x range (low-8x, excluding loan and NCE) at the end of fiscal year 2024, whereas it had previously estimated 11.5x-12x (6.5x-7x excluding loan and NCE).

The outlook is negative.

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