Moody's gives Naked Juice loans Ba3, B3

Moody's Investors Service said it gave Ba3 ratings to Naked Juice LLC’s first-lien term loan, first-lien multicurrency revolver and delayed-draw term loan and a B3 rating to its second-lien term loan. Concurrently, the agency assigned the company a B1 corporate family rating and a B1-PD probability of default rating.

This debt, cash and rollover equity will support Naked Juice's partial spinoff from Pepsi by PAI Partners, with Pepsi keeping a 39% ownership stake.

"Today's actions recognize the initially high out of the box leverage, with debt/EBITDA approaching 7x , though EBIT-to-interest coverage of over 2x is a partial quantitative mitigant," said Charlie O'Shea, a Moody's vice president and senior credit officer, in a press release.

"Moody's considers Naked Juice's competitive position, led by solid brands such as Tropicana and Naked Juice, as well as distribution contracts with Pepsi that will continue post-closing, as a key rating plus, with the expectation that financial strategy will be balanced between shareholders and debtholders to ensure deleveraging," continued O'Shea.

The outlook is stable.

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