S&P rates Griffon loan BB, cuts notes

S&P said it assigned Griffon Corp.’s planned $750 million term loan BB issue and 1 recovery ratings and lowered the rating on the unsecured notes to B- from B+ and revised the recovery rating to 6 from 4.

Concurrently, the agency affirmed Griffon’s B+ issuer rating and removed all its ratings on the company from CreditWatch, where it placed them with positive implications on Dec. 20.

“We expect debt leverage to increase but remain in line with the current rating with debt to EBITDA of about 5x in 2022. Hunter generated about $375 million in revenues and nearly $90 million in EBITDA for the trailing-12-months ended July 2021. The acquisition is mostly debt-financed and is expected to close in January 2022. Despite the elevated leverage, we expect credit metrics to remain in line with our expectations for the rating with pro forma debt to EBITDA of about 5x which compares to 3.5x in fiscal 2021 (September year-end),” S&P said in a press release.

Griffon will use the loan, balance sheet cash and revolver borrowings to help finance its acquisition of MidOcean Hunter Holdings Inc. for $870 million, including fees and expenses.

The outlook is stable.

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