S&P lowers Packers, rates loan B-

S&P said it lowered the corporate credit rating on Packers Holdings LLC to B- from B.

The outlook is stable.

The agency also said it assigned a B- rating and 3 recovery rating to the company's proposed first-lien credit facility, which includes a $50 million revolver due in 2022 and $575 million term loan due in 2024.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The downgrades reflect a substantial increase in leverage following the proposed dividend recapitalization, S&P explained.

The agency said it expects this transaction will weaken the company's credit metrics such that its adjusted leverage will rise to the mid- to high-8x range, from mid-5x as of Sept. 30, 2017.

But through favorable demand factors and a focus on cost containment, S&P said it believes the company will reduce leverage to the mid- to low-8x range over the next 12 months.

The agency also said it expects continued productivity efforts, expansion into FDA inspection plants, new business wins and annual price increases will support continued earnings growth and improving credit metrics over the next 12 months.

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