Fitch snips KinderCare, rates loan BB

Fitch Ratings said it downgraded KinderCare Learning Cos., Inc.'s and Kuehg Corp.'s long-term issuer default rating to B+ from BB-. The agency also lowered Kuehg's revolving facility and term loan ratings to BB/RR2 from BB+/RR1.

Fitch also rated KUEHG's new $250 million incremental first lien term loan BB/RR2.

“The downgrade reflects a more aggressive capital structure associated with proposed debt-funded distribution to shareholders. Post the transaction, Fitch estimates KinderCare to have EBITDAR leverage of 6.4x in 2024, above the previously established rating sensitivities of 6x.

“In addition, Fitch estimates EBITDAR fixed charge coverage near 1.5x, consistent with single B rated peers. The company's long-term IDR also reflects modest revenue growth and robust cash flow generation FCF through the forecast,” the agency said in a press release.

The outlook is stable.

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