Moody's downgrades Interstate Bakeries

Moody's Investors Service downgraded the ratings of Interstate Bakeries' senior implied and senior secured ratings to B2 from B1. The outlook is negative.

Moody's said the ratings downgrade reflects the continuing challenges the company faces as it works to strengthen profitability and credit measurements in a highly competitive market with weak category volume and sales trends and excess industry capacity.

Moody's downgraded Interstate's $300 million senior secured revolving credit facility maturing 206, its $272 million term loan A, $122 million term loan B to B2 from B1, its senior unsecured shelf to prospective B3 from prospective B2, its subordinated shelf to prospective Caa1 from prospective B3, its preferred shelf to prospective Caa2 from prospective Caa1, its senior implied to B2 from B1 and its unsecured issuer rating to B3 from B2.

Interstate Bakeries had $540 million of debt outstanding at March 6, yielding Debt/last 12 months EBITDA of 3.7x. Lease adjusted leverage was 5.1x EBITDAR, while EBITR coverage of interest expense and operating lease rentals was 1.1x.

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