Moody's downgrades Labeyrie

Moody's Investors Service said it downgraded Financiere Labeyrie Fine Foods SAS’ corporate family rating to Caa1 from B3 and to Caa1-PD from B3-PD the probability of default rating. Concurrently, Moody's trimmed to Caa1 from B3 the rating on the €455 million senior secured term loan B due July 2026 and the €65 million senior secured revolving credit facility also due in July 2026. The outlook has been changed to negative from stable.

"Today's action reflects Labeyrie's weak operating performance and negative free cash flow generation that has consistently fallen short of Moody's expectations, leading to a very high financial leverage and Moody's view that the current demand and industry headwinds will persist over the next 12 to 18 months, challenging a timely recovery in profitability and credit metrics," said Valentino Balletta, a Moody's analyst and lead analyst for Labeyrie, in a press release.

"The downgrade also reflects a deterioration in the company's liquidity profile driven by lower earnings and expectations that a substantial negative free cash flow generation over the next 12 to 18 months will lead to a further increase in debt and strain on liquidity, creating an elevated risk of debt restructuring," Balletta added.

Labeyrie’s debt to EBITDA is expected to remain at above 10x (on a Moody’s adjusted basis) over the next 12 to 18 months, the agency said.

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