NEW YORK — Moody’s Investors Service has upgraded ratings of CSM Bakery Solutions Ltd., including the company’s corporate family rating to Caa2 from Caa3. Moody’s also revised the outlook to stable from negative. “The rating upgrades reflect the recent successful completion of a recapitalization, including debt maturity extensions up to 18 months along with a €50 million cash equity contribution from the sponsor,” Moody’s said. “The transaction reduced financial leverage and enhanced liquidity through repayment of revolver borrowings, adding cash to the balance sheet and extending maturities. This has provided the company a modest window to reduce financial leverage through an operational turnaround or other possible actions such as asset sales.”

Moody’s said CSM’s ability to generate positive free cash flow likely will be challenged over the next year by “significantly higher financing costs” associated with the refinancing and business disruptions and slowdowns caused by the coronavirus (COVID-19) pandemic. In addition, cash interest expense could potentially decrease modestly if CSM elects to pay a higher interest rate on the second lien term loan along with 90% pay-in-kind interest, Moody’s said.

According to Moody’s, CSM’s adjusted debt/EBITDA likely will remain above 10x over the next year.