KeHE Distributors Holdings LLC Downgraded To 'B-' On Profitability Erosion, Outlook Stable; Issue Ratings Also Lowered

U.S. food distributor KeHE Distributors Holdings LLC continues to report free operating cash flow and credit metrics below our expectations, given challenges the company has faced in integrating acquisitions and scaling up the business to support new grocery volume. As a result, we are lowering our corporate credit rating to 'B-' from 'B'. We are lowering our issue-level rating on the company's second-lien notes to 'CCC+', the recovery rating remains '5'. We are also lowering our issue-level rating on the company's asset-backed lending (ABL) revolving credit facility to 'B+' from 'BB-'. The recovery rating remains '1'. The stable outlook reflects our view that despite current difficulties in managing integration costs, KeHE will continue to see top-line benefit from new distribution

...+ U.S. food distributor KeHE Distributors Holdings LLC continues to report free operating cash flow and credit metrics below our expectations, given challenges the company has faced in integrating acquisitions and scaling up the business to support new grocery volume. + As a result, we are lowering our corporate credit rating to 'B-' from 'B'. + We are lowering our issue-level rating on the company's second-lien notes to '###+', the recovery rating remains '5'. We are also lowering our issue-level rating on the company's asset-backed lending (ABL) revolving credit facility to 'B+' from '##-'. The recovery rating remains '1'. + The stable outlook reflects our view that despite current difficulties in managing integration costs, KeHE will continue to see top-line benefit from new distribution relationships related to the growing long-term demand of the natural and organic (N&O) category across grocers nationwide. NEW YORK (Standard & Poor's) April 20, 2016--Standard & Poor's Ratings Services...

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