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Investing.com -- S&P Global Ratings has downgraded the credit rating of U.S.-based pet wellness company, Woof Intermediate Inc., also known as Wellness Pet. The downgrade follows the company’s decision to restructure its senior secured first-lien and second-lien term loans, a move that S&P views as distressed and tantamount to default.
The restructuring includes a new incremental debt funding of $100 million as part of a new first-lien, first-out term loan. Additionally, the maturity of the asset-based lending (ABL) facility was extended to October 2029 from December 2025, with no other significant changes in terms. As of the end of March 2025, the facility had an outstanding balance of $30 million.
S&P Global Ratings lowered the issuer credit rating on Wellness Pet to ’SD’ (selective default) from ’ CCC (WA:CCCP)’ due to the term loan restructurings. The rating agency also lowered the issue-level rating on the company’s first-lien term loan to ’D’ from ’CCC’ and the rating on its second-lien term loan to ’D’ from ’CC’.
On May 30, 2025, Wellness Pet announced its debt restructuring plan which involved raising $100 million of new money as part of the new first-lien, first-out debt. The first-lien lenders agreed to exchange their existing debt at 80 cents on the dollar for a mix of first- and second-out debt. Financial sponsor, Clearlake, received third-out debt at par in exchange for a portion of its existing second lien loans. Other second-lien lenders received a mix of cash and second-out debt at 70 cents on the dollar.
The new capital structure involves three tranches, the final sizes of which will be determined by the existing lenders’ decision to participate. The first-lien, first-out tranche will comprise $100 million of new capital provided by participating lenders. Second-lien lenders have the option to refinance their existing debt at 70 cents on the dollar with a mix of cash and new first-lien, second-out debt. The third-out tranches will include the rolled-up amounts from the existing second-lien term loan held by Clearlake and will be refinanced at par.
The restructuring extends the maturities on the senior secured facilities, with all three tranches of the new term loan maturing in December 2029. Wellness Pet plans to use the proceeds from the new financing, along with $40 million cash held at Bark Holdco LLC, and a $10 million cash balance, to repay the cash portion of the existing second-lien term loan exchange, make accrued interest payments, and add cash to the balance sheet.
S&P Global Ratings plans to reevaluate its ratings on Wellness Pet upon completion of the transaction to reflect its new capital structure and liquidity position. The agency will focus on the long-term viability of Wellness Pet’s capital structure, its recent performance, and its creditworthiness, including its high leverage, high interest burden, and pressured cash flow.
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