Research Update: Aramark Upgraded To 'BB' From 'BB-' On Improving Performance And Debt Reduction; Outlook Stable

U.S.-based food concession and uniform services company Aramark?s operating performance continues to improve as business volume expands and profitability recovers. The company's credit metrics have improved significantly, and we believe this trend will continue, with leverage approaching 4.5x by fiscal year-end 2023 and toward 4x in fiscal 2024. The company plans to refinance a portion of its 2025 term loan with proceeds from a new seven-year term loan B. Therefore, we raised our issuer credit rating on Aramark to 'BB' from 'BB-'. We assigned our 'BBB-' issue-level rating to the proposed term loan. The '1' recovery rating reflects our expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of default. At the same time, we raised our

...- U.S.-based food concession and uniform services company Aramark's operating performance continues to improve as business volume expands and profitability recovers. - The company's credit metrics have improved significantly, and we believe this trend will continue, with leverage approaching 4.5x by fiscal year-end 2023 and toward 4x in fiscal 2024. - The company plans to refinance a portion of its 2025 term loan with proceeds from a new seven-year term loan B. - Therefore, we raised our issuer credit rating on Aramark to '##' from '##-'. - We assigned our '###-' issue-level rating to the proposed term loan. The '1' recovery rating reflects our expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of default. - At the same time, we raised our rating on the company's senior unsecured debt to '##-' from 'B+'. The '5' recovery rating is unchanged. - The stable outlook reflects our expectation that improving operating performance will support stronger free operating...

Research Update