Manitowoc Foodservice Inc. Assigned #B+# Corporate Credit Rating, Outlook Stable

Stocks and Financial Services Press Releases Wednesday January 27, 2016 09:18
NEW YORK--27 Jan--Standard & Poor's
NEW YORK (Standard & Poor's) Jan. 26, 2016--Standard & Poor's Ratings Servicessaid today that it has assigned its 'B+' corporate credit rating to ManitowocFoodservice Inc. The outlook is stable.

At the same time, we assigned our 'B+' issue-level rating and '3' recoveryrating to Manitowoc Foodservice's proposed $1.225 billion senior securedcredit facilities, which comprise a $250 million senior secured revolvingcredit facility due 2021 and a $975 million senior secured term loan B due

2024. The '3' recovery rating indicates our expectation of meaningful(50%-70%; lower half of the range) recovery in the event of a payment default.

Additionally, we assigned our 'B' issue-level rating and '5' recovery ratingto Manitowoc Foodservice's proposed $425 million senior notes due 2024. The'5' recovery rating indicates our expectation of modest (10%-30%; lower halfof the range) recovery in the event of a payment default.

The company will use the proceeds from these notes primarily to fund a $1.3billion dividend to Manitowoc Co. Inc. and pay related fees and expenses.

"Manitowoc Foodservice operates in cyclical and fragmented end markets,including restaurants (nearly 70% of sales), travel and leisure (11%), retail(6%), education (5%), health care (5%), and other markets," said Standard &Poor's credit analyst Jaissy Lorenzo. "The company has fair product,

geographic, and end-market diversity and moderate customer concentration."Partially offsetting these factors are the company's strong market positionsin some of its key product lines, its primarily replacement-driven demand, andits modest proportion of aftermarket revenues.

The stable outlook reflects our expectation that weak demand from large chainrestaurants in Asia and headwinds from a stronger dollar, coupled with thesale of the company's KPS business, will be partially offset by improvingconditions in the North American restaurant markets. We expect that ManitowocFoodservice will improve its margins to the high-teen percent range andgradually reduce its debt-to-EBITDA metric below 6x over the next 12 monthsbecause of the recent cost-reduction initiatives it implemented in response tothe soft operating environment.

We could lower our ratings on Manitowoc if a weak operating performance ordebt-financed activities caused the company's credit measures to weakensignificantly for a sustained period--for instance, if the company's totaldebt-to-EBITDA metric will likely remain well above 6x.

Although less likely in the near term, we could raise our ratings on ManitowocFoodservice if its operating performance improves such that the company'sadjusted total debt-to-EBITDA metric decreases below 5x and we expect it toremain there. We would also expect the company to adhere to a financial policythat would support its improved credit measures.


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