S&P rates Visual Comfort loans B, CCC+

S&P said it assigned Visual Comfort & Co. (Illuminate Merger Sub Corp.) planned $835 million first-lien term loan B issue-level and 3 recovery ratings, indicating an expectation of meaningful (50%-70%; rounded estimate: 55%) recovery in default.

The agency also assigned CCC+ issue-level and 6 recovery ratings to the proposed $335 million second-lien term loan, indicating an expectation of negligible (0%-10%; rounded estimate: 0%) recovery.

Visual Comfort is being recapitalized at a value of about $2.2 billion by Goldman Sachs Asset Management and Leonard Green & Partners, LP, with their investment partners AEA investors and current management. An undrawn and unrated $125 million asset-based lending facility, the first-lien term loan, the second-lien term loan and $625 million of new common equity will fund the investment and related fees.

S&P said it gave the new parent and borrower of the loans, Illuminate Merger, a B issuer rating and revised the outlook to negative. Illuminate will merge with and into VC GB Holdings I Corp., which will become the borrower of the senior secured facilities. The agency will withdraw the ratings on the former parent, Visual Comfort & Co., and debt following close of this transaction.

The revised outlook reflects the increase in leverage. “We could lower the ratings over the next 12 months if we expect leverage remains above 6.5x over the next 12 months,” the agency said in a press release.

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