S&P rates Naked Juice, B, loans B, CCC+

S&P said it gave B ratings to Naked Juice LLC and its planned first-lien facilities and a CCC+ rating to its proposed $520 million second-lien loan. The recovery ratings on the first-lien loans are 3 (50%-70% recovery expectation, 65% rounded estimate) and 6 (0%-10% recovery expectation, 0% rounded estimate) on the second-lien loan.

The first-lien facilities will consist of a $1.75 billion term loan, a $350 million unfunded revolver, and a $150 million unfunded delayed-draw term loan.

The issuer is a joint venture between PAI Partners and PepsiCo Inc. PAI will have a 61% stake and PepsiCo a 39% stake.

“We expect Naked Juice to exercise aggressive financial policies and maintain S&P Global Ratings' adjusted leverage above 6x. S&P Global Ratings' pro forma adjusted leverage is estimated at about 7.25x at close. Notwithstanding the sponsor's strategy to invest in and grow the business, Naked Juice could transact large debt-financed distributions, share repurchases, or bolt-on acquisitions,” the agency said in a press release.

S&P said it also expects Naked Juice to use the delayed-draw loan to buy certain PepsiCo European juice brands.

The outlook is stable.

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