Research Update: Weber Inc. Downgraded To 'B+' On Supply Chain Pressures; Secured Debt Rating Lowered To 'B+'; Outlook Developing

U.S.-based outdoor grill manufacturer Weber Inc. experienced severe supply chain disruptions during its first fiscal quarter, including significant commodity price inflation, higher freight costs, and supply constraints due to port congestion. This led to significant working capital build, weak profitability, and higher cash outlays. Weber is seeking to raise a $250 million incremental term loan B to enhance its liquidity position while it navigates the ongoing supply chain difficulties. Because of the weak first fiscal quarter and this additional debt, we estimate pro forma leverage will increase to the high-6x area from about 4x as of Sept. 30, 2021. As a result of these factors, we lowered our issuer credit rating on Weber to 'B+' from 'BB-'. We also revised

...- U.S.-based outdoor grill manufacturer Weber Inc. experienced severe supply chain disruptions during its first fiscal quarter, including significant commodity price inflation, higher freight costs, and supply constraints due to port congestion. This led to significant working capital build, weak profitability, and higher cash outlays. - Weber is seeking to raise a $250 million incremental term loan B to enhance its liquidity position while it navigates the ongoing supply chain difficulties. Because of the weak first fiscal quarter and this additional debt, we estimate pro forma leverage will increase to the high-6x area from about 4x as of Sept. 30, 2021. - As a result of these factors, we lowered our issuer credit rating on Weber to 'B+' from '##-'. We also revised the outlook to developing from stable. - At the same time, we assigned our 'B+' issue-level and '3' recovery rating to the proposed incremental term loan. We also lowered our ratings on the company's existing senior secured...

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