Blue Ribbon LLC, doing business as Pabst Brewing, was downgraded on Sept. 16 by S&P Global Ratings to CCC+, from B-, retaining a negative outlook, after the agency downgraded the group credit profile (GCP) of its parent company, Blue Ribbon Holdings LLC, to b-, from b. The GCP was cut because of weaker-than-expected performance at City Brewing, and Pabst was lowered because its rating is subject to a cap of one notch under its GCP’s rating. Pabst's secured debt rating was also reduced, to B-, from B.

S&P Global said it considers Pabst’s capital structure to be unsustainable unless cash flow improves. The agency said operating performance is "slightly behind our expectations," projecting break-even free operating cash flow (FOCF) this year and around $10 million positive FOCF in 2023, which is insufficient to support the company’s amortization requirements.

Along those lines, the agency considers Pabst’s liquidity as “less than adequate” because of the weak cash flow. S&P Global offered as a liquidity option that Pabst sell its Irwindale, Calif., property, noting that the property was acquired in 2020 from Molson Coors Beverage company and Pabst has said it intends to sell it.

Pabst is a brewer whose products include its flagship Pabst Blue Ribbon brand, Old Milwaukee, Colt 45, Schlitz, Stroh's and others.

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This article originally appeared on PitchBook News