Moody’s cuts TreeHouse debt, rates notes Ba3

Moody's Investors Service said it confirmed the Ba2 corporate family rating and Ba2-PD probability of default rating of TreeHouse Foods, Inc. and downgraded the senior unsecured debt rating to Ba3 from Ba2.

The agency also affirmed the SGL-2 speculative grade liquidity rating and revised the outlook to negative.

These actions conclude the review for downgrade that began on Nov. 2 after TreeHouse announced that it agreed to purchase the private brands business of ConAgra Foods (Baa2 developing) for $2.7 billion.

Moody's also assigned a Ba3 rating to $775 million of senior unsecured notes being offered by TreeHouse, the proceeds from which will be used to partially fund the pending private brands acquisition.

The remaining amount of the $2.7 billion purchase price will be funded through a $750 million common equity issuance completed Jan. 20, a new $1.025 billion senior secured term loan (not rated) and roughly $250 million of incremental borrowings under its $900 million senior secured revolving credit facility (not rated). The size of the equity issuance was reduced from the $1 billion amount originally contemplated due to market conditions; the $250 million difference was shifted to secured bank financing.

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