Kraft Heinz's (KHC) credit scrutiny is adding to it's negative headlines in Friday trading.
Shares have lost nearly one third of their value at daily lows, prompted by a bearish outlook for 2019 that will necessitate major changes, not least of which is a serious slashing of the dividend.
The cost cuts and dividend cut were not enough for Standard & Poor's however, which shifted its rating to BBB/Negative From BBB/Stable for the company, maintaining an overall rating two notches above junk.
"The negative outlook reflects the potential for a lower rating over the next 12 to 24 months if we unfavorably reassess KHC's business risk," the agency statement said.
The report cited increased competition or a renewed shift in demand away from company products as key risks to the highly levered company.
"Moreover, a lower rating could result if the ongoing SEC investigation uncovers material accounting misstatements, internal control problems, or other irregularities that adversely affect our view of the company's financial position or its standing in capital markets," the release adds.
A downgrade in the company's credit rating could be severely problematic as it contends with a persistent debt pile that it has largely failed to deal with since the blockbuster merger.
The already debt laden company would be severely impacted should it not be able to borrow as it deals with the issue. Over $3 billion in debt will come due in both 2020 and 2023 alone, for reference.
Moody's did not return requests for comment on their credit rating, which remains positive dating back to June 2018.
