S&P: Post loan BB-, notes B

Standard & Poor's said it affirmed Post Holdings Inc.'s B corporate credit rating.

S&P also said it assigned a BB- rating to the company's proposed $735 million term loan B due 2021 and $400 million revolving credit facility due 2019.

The recovery rating on the senior secured facilities is 1, indicating 90% to 100% expected default recovery.

S&P also said it assigned a B rating to the company's proposed $630 million senior notes due 2022. The recovery rating on these notes is 4, indicating 30% to 50% expected default recovery.

The outlook is stable.

The ratings reflect a view that Michael Foods will increase Post's operating scale, diversify its customer mix and sales channels and add significant free operating cash flow, S&P said.

But the agency said it also believes Post has a limited operating track record under its new operating model and in its acquired businesses and has yet to realize meaningful synergies, the agency said.

The proceeds from the proposed new debt, along with roughly $800 million cash, $200 million in proposed mandatory convertible tangible equity units and $200 million in proposed common equity, will fund the acquisition and cover fees and expenses, S&P said.

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