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Moody's assigns Visual Comfort B2
Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to Illuminate Merger Sub Corp. (Visual Comfort & Co.). Moody's also assigned a B1 rating to the company's planned $835 million first-lien term loan due 2028 and a Caa1 rating to its proposed $335 million second-lien term loan due 2029. The outlook is stable.
Visual Comfort & Co. is being recapitalized by Goldman Sachs Asset Management and Leonard Green & Partners, LP, with investment partner AEA Investors and management. The transaction is valued at $2.2 billion, and will be funded by the proceeds of new credit facilities and $1 billion of equity contribution.
“The assignment of the B2 corporate family rating to VCC reflects Moody's expectation that the company will make significant progress in reducing leverage toward 6x over the next two years through earnings growth and debt repayment. Moody's also expects the company to maintain EBIT margin above 15% and generate positive free cash flow,” the agency said in a press release.
The first-lien term loan, a notch above the corporate family rating, reflects its first-priority interest in the company’s fixed assets. The second-lien term loan rating reflects its junior position in the capital structure and the second-priority interest in fixed assets, the agency explained.
“The stable outlook reflects Moody's expectation that over the next 12 to 18 months the company will benefit from strong conditions in residential repair and remodeling and new construction markets, and delever through earnings growth and debt repayment stemming from its free cash flow,” Moody’s said.
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