Levels for Aurora Foods bank debt softened after the company released its earnings report and Moody's Investors Service subsequently downgraded the credit. The bank debt has slipped from the 92-93 context to the 91-92 1/2 range as the company clocked in a $483.2 million loss for 2002. No trades could be confirmed. Low cash flow run rate levels, limited liquidity, and leverage levels around eight times concern the rating agency.
The anticipation of asset sales is said to be supporting the credit as Aurora Foods' management has stated that a transaction is likely to be completed in the next few months. They are motivated to complete asset sales and in general investors like food companies, noted one buysider. The company recently amended its bank debt to loosen some of its financial covenants until 2004. In conjunction with the amendment, Aurora Foods must complete $325 million in asset sales by the end of the first quarter of 2004 and use the proceeds to repay bank debt. Calls to finance officials at Aurora Foods were not returned by press time.