Moody's affirms Core & Main after add-on

Moody's Investors Service said it affirmed Core & Main LP's B2 corporate family rating and B-2PD probability of default rating, along with the Caa1 (LGD 5) rating on its senior unsecured global notes and B2 (LGD 4) rating on its senior secured term loan.

The outlook remains stable.

The ratings follow news that Core & Main reached a definitive agreement to acquire Long Island Pipe Supply, Inc. for about $220 million, Moody's said.

The company plans to fund this acquisition and related transaction fees and expenses with a $225 million add-on to its term loan B due 2024, the agency said.

Pro forma leverage for year-end 2019 is projected to be 5.8x, a modest weakening from 5.5x at year-end 2018, but remains adequate for the rating category, Moody's said.

The purchase of Long Island Pipe Supply follows the recent acquisitions of Maskell Pipe & Supply and DCL Fabrication and Supply earlier this year, the agency said.

The ratings reflect the company's leading position as a national water products distributor, solid credit metrics and strong free cash flow generation, Moody's said.

The acquisition of Long Island Pipe Supply further diversifies the company's product offering and provides an entrance into the Northeast market, where Core & Main did not previously have a significant presence, the agency said.

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