Aurora Foods $200M Sub Nts Rtd B+, Bank Loan BB by S&P.NEW YORK--(BUSINESS WIRE)--June 23, 1998--Standard & Poor's today assigned its single-'B'-plus rating to Aurora Foods Inc.'s proposed $200 million series E senior subordinated notes due 2008 and its double-'B' bank loan rating to the company's proposed $225 million term loan and $175 million revolver, both due in 2005. These ratings are contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent the successful completion of Aurora's proposed initial public offering (IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ). The ratings listed below remain on CreditWatch; however, implications are revised to positive from developing. If Aurora's proposed IPO is completed, the company's corporate credit rating will be raised to double-'B', the rating on its $100 million 9.875% senior subordinated notes will be raised to single-'B'-plus, and the rating on the existing bank loan will be withdrawn. Upon completion of the proposed tender offer for the Van De Kamp's notes, the Van De Kamp's ratings will be withdrawn. The new ratings reflect Aurora's improved financial profile, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma for the proposed IPO and debt transaction, the increased diversity of the company's product portfolio following the recently completed merger of Van De Kamp's into Aurora, and the company's proven management team. These factors are partially offset by Aurora's ongoing aggressive acquisition strategy. Aurora holds leading market shares in the table syrup, baking mix, and frozen seafood categories with the well known Mrs. Butterworth's, Log cabin log cabin or log house, style of home typical of the American pioneer on the Western frontier of the United States in the great westward expansion after 1765. It was constructed with few tools, usually an axe or an adz and an auger. , Duncan Hines Duncan Hines (March 26, 1880–March 15, 1959) was a U.S. pioneer of restaurant ratings for travelers. Born in Bowling Green, Kentucky, Hines was a traveling salesman for a Chicago printer. , Van De Kamp's, and Mrs. Paul's brands. The company also holds strong positions in the frozen pancakes, waffles, and pizza categories with the Aunt Jemima Aunt Jemima is a trademark for pancake flour, syrup, and other breakfast foods. The trademark dates to 1893, although Aunt Jemima pancake mix debuted in 1889. The phrase "Aunt Jemima" is sometimes used as a female version of "Uncle Tom" to refer to a black woman who is perceived as and Celeste Celeste is a woman's first name. Celeste may also refer to: in Music
While the company remains a niche player in the packaged food industry, management has successfully executed its strategy of acquiring well recognized, undermanaged brands to grow the business and diversify the product portfolio. These brands have been revitalized through increased marketing support and product innovations. While acquisition risk remains a rating concern, management has demonstrated its ability to execute this strategy. Going forward, Standard & Poor's expects the company to continue to use a combination of debt and equity to finance acquisitions, keeping the firm's financial profile in line with the revised ratings. The proposed IPO, which is expected to generate approximately $257 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). , should significantly improve the company's financial profile. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. before interest, taxes, depreciation, and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) to total interest is a solid 2.7 times (x), and pro forma total debt to EBITDA remains relatively high, at about 4.5x. However, due to the company's strong and stable cash flow characteristics, interest coverage is expected to rapidly improve to the mid-3.0x area, and leverage is expected to decline. While additional acquisitions are likely, Standard & Poor's does not expect interest coverage to fall below 3.0x following an acquisition. The bank facilities are rated the same as the corporate credit rating. The facilities are secured by a first priority pledge of the tangible and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. of the company and the capital stock of the borrower's direct and indirect subsidiaries. While the facilities derive strength from their secured position, based on Standard & Poor's simulated default scenario, it is not clear that a distressed enterprise value would be sufficient to fully cover the bank facilities. When the CreditWatch listings are resolved, the ratings outlook will be stable, reflecting Standard & Poor's expectations that the company will retain its strong market positions, continue to pursue a prudent acquisition strategy, and maintain a financial profile in line with the current rating. RATINGS REMAINING ON WATCH; IMPLICATIONS REVISED TO POSITIVE Aurora Foods Inc. Corp credit rtg B+ $100 mil 9.875% sr sub nts due 2007 B- $60 mil revolver due 2001 B+ Van de Kamp's, Inc. Corp credit rtg B+ $100 mil 12% sr sub nts due 2005 B- Copyright 1998, Standard & Poor's Rating Services
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