Welbilt Inc. Rating Lowered To 'B-'; Placed On CreditWatch Negative Due To Coronavirus Fallout

The coronavirus outbreak is leading to a growing number of event cancellations and closures of restaurants, schools, and other institutions. An emphasis on social distancing is also causing restaurant traffic to weaken significantly.
We believe foodservice equipment distributors will suffer considerable near-term revenue and profit losses because of their reliance on these sectors.
We are lowering our issuer credit rating on U.S.-based Welbilt Inc. and our issue-level ratings on its senior secured credit facilities to 'B-' from 'BB-'. At the same time, we are lowering our issue-level rating on the company's senior unsecured notes to 'CCC+' from 'B+'. We are placing all ratings on CreditWatch with negative implications.
The CreditWatch placement reflects the potential for a lower rating over the next few months depending on whether the company successfully amends its revolver's financial covenants to remain in compliance. Additionally, we will assess the duration and magnitude of the effect of the coronavirus pandemic on Welbilt's liquidity and debt leverage.
NEW YORK (S&P Global Ratings) March 24, 2020--S&P Global Ratings today took the rating actions listed above.
The recent outbreak of the coronavirus is disrupting the foodservice equipment end markets in the U.S. and EMEA.  There is substantial uncertainty around the scope and duration of the outbreak and any lingering effects on the economy and consumer behavior. The placement of the ratings on CreditWatch incorporates this economic uncertainty stemming from the pandemic as well as the company's ability to amend both its maximum total leverage covenant and consolidated interest coverage covenant, both of which have reasonable risk of noncompliance at the second quarter-end.


The placement of the ratings on CreditWatch with negative implications reflects the potential for a downgrade over the next few months, depending on the company's ability to amend its revolver's financial covenants. Additionally, our resolution will factor in the damage caused by the effects of the coronavirus pandemic on product demand, liquidity, and credit metrics.
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