S&P rates Apex Tool loans B-, CCC+

S&P said it assigned preliminary B- issue and 3 recovery ratings to Apex Tool Group LLC’s planned senior secured first-lien credit facilities, to be comprised of a $855 million first-lien term loan and a $200 million revolving credit facility. Simultaneously, the agency assigned preliminary CCC+ issue-level and 5 recovery ratings to its proposed $350 million second-lien term loan.

Concurrently, S&P placed all its Apex Tool ratings on CreditWatch with positive implications.

The CreditWatch placement follows Apex Tool reporting it will refinance its capital structure, the agency said.

“We expect Apex's operating and financial performance to continue and improve in 2022. We expect top-line growth in Apex Tool Group's hand tools business of about 10%-12% for fiscal 2022, driven by continued strength in residential end markets because of lower mortgage rates (now rising slightly but still significantly below historical level), as well as increasing deurbanization trends. We also expect top-line growth in Apex Tool Group's power tools business of about 7%-9% in 2022, driven by the strong rebound in the auto market. Altogether, we believe top-line growth for 2022 to be in the high-single-digit percent area or nearing 10%,” S&P said in a press release.

The agency said it aims to resolve the CreditWatch following a review of the company's post-close refinancing capital structure. “We would raise the rating on Apex Tool Group once it has funded the refinancing of its existing capital structure and continued to meet other continuing obligations.”

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