Research Update: High Liner Foods Inc. Outlook Revised To Stable From Negative On Improved Operating Performance

Improved operating efficiency has allowed Nova Scotia-based frozen seafood processor, High Liner Foods Inc., to boost profitability and reduce debt. We expect the company to exit 2019 with S&P Global Ratings' adjusted debt-to-EBITDA of about 4.5x, which is a notable improvement from our previous expectation in the 7.0x area. As a result, on Sept. 25, 2019, S&P Global Ratings revised its outlook on High Liner to stable from negative. At the same time, S&P Global Ratings affirmed its 'B' issuer credit rating on the company. We also assigned our 'B' issue-level and '3' recovery ratings to the company's proposed US$300 million secured term loan B, the proceeds of which will be used to refinance existing debt. The stable outlook reflects

...- Improved operating efficiency has allowed Nova Scotia-based frozen seafood processor, High Liner Foods Inc., to boost profitability and reduce debt. We expect the company to exit 2019 with S&P Global Ratings' adjusted debt-to-EBITDA of about 4.5x, which is a notable improvement from our previous expectation in the 7.0x area. - As a result, on Sept. 25, 2019, S&P Global Ratings revised its outlook on High Liner to stable from negative. At the same time, S&P Global Ratings affirmed its 'B' issuer credit rating on the company. - We also assigned our 'B' issue-level and '3' recovery ratings to the company's proposed US$300 million secured term loan B, the proceeds of which will be used to refinance existing debt. - The stable outlook reflects our expectation that High Liner can protect profitability by additional cost savings while slowly addressing its revenue challenges through product innovation. Against this backdrop, we believe the company can sustain debt-to-EBITDA in the 4.5x-5.0x...

Research Update