Yahoo Finance United Natural Foods Pursues Refinancing After Moody’s Downgrade
(Bloomberg) -- JPMorgan Chase & Co is sounding out investors to refinance organic food provider United Natural Foods Inc.’s upcoming debt maturities, according to people with knowledge of the matter.
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The bank is in conversations with lenders for financing of at least $600 million that would take out United Natural’s term loan due in October of next year, said the people who asked not to be identified discussing details that are private. Conversations are ongoing and details may change, they said.
Representatives for JPMorgan and United Natural declined to comment.
United Natural was recently downgraded by Moody’s Ratings to B3 from B2, due to the company’s “weaker credit metrics with high financial leverage, very weak interest coverage and negative free cash flow,” according to March 28 Moody’s statement. It added that United Natural is dependent on its contract with Amazon.com-owned Whole Foods Market, which accounts for roughly 20% of its sales. That distribution contract runs until September 2027.
The company has about $2.21 billion of debt outstanding, including unsecured bonds maturing in 2028 and a large revolver due 2027, according to data compiled by Bloomberg.
Goldman Sachs Group Inc. provided the original loan in 2018 for United Natural’s acquisition of grocery chain Supervalu. But with investors turning skittish, the bank tweaked the terms to allow hedge funds to reap a windfall from their credit default swap bets, Bloomberg reported at the time. That arrangement was then at the center of a lawsuit that accused the Wall Street firm of gorging on fees while exposing United Natural to hedge-fund sharks who stood to reap gains if it faltered. The lawsuit was later dismissed.
A group of banks led by Credit Suisse Group AG later repriced the loan in 2021.
United Natural is a distributor of natural food and other grocery products to retailers and supermarket chains across the US and Canada.
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