Moody’s ups Outerstuff, rates loan Caa2

Moody’s Investors Service said it raised Outerstuff LLC’s amended senior secured term loan due 2027 and upgraded the senior secured non-extended term loan to Caa2 from Caa3. The agency also raised the company’s corporate family rating to Caa1 from Caa2 and affirmed the probability of default rating at Caa2-PD. The outlook was changed to stable from negative.

“The rating actions reflect Outerstuff's amendment and extension of its senior secured term loan to Dec. 31, 2027 from Dec. 29, 2023. As part of the transaction, the company's majority owner Sol Werdiger contributed $30 million of equity, which was used to pay down $20 million of the term loan pro-rata, reducing the total term loan outstanding amount to $122 million from $142.5 million, and pay for fees and expenses, Moody’s said in a press release.

The agency affirmed the PDR instead of upgrading it because a $14 million stub portion of the term loan was not extended, and the amendment includes a forbearance on exercising rights and remedies for the upcoming Dec. 29 payment default. Moody’s said it plans to append an LD, limited default designation, to the PDR.

The company also extended its $100 million asset-based revolver to Nov. 15, 2027, and the $5 million shareholder loan was extended to March 31, 2028.

“Pro forma for the transaction, Moody's-adjusted debt/EBITDA was 6.5x (equivalent to about 4.6x debt/company-adjusted EBITDA) and (EBITDA-capex)/interest expense was at an estimated 1.4x. Moody's expects leverage to decline to low-5x debt/EBITDA in 2024, driven by revolver repayment with free cash flow,” the agency said.

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