Moody’s: Griffon note add-on B2

Moody's Investors Service said it affirmed Griffon Corp.’s B1 corporate family rating, B1-PD probability of default rating, B2 senior unsecured notes rating and SGL-2 speculative grade liquidity rating.

At the same time, the agency assigned a B2 rating to the company's proposed $200 million senior unsecured notes issuance, which will increase the principal amount of unsecured notes to $925 million (from $725 million prior to the transaction).

Proceeds from the add-on will be used to fund the $200 million acquisition of ClosetMaid.

The outlook is negative.

"The outlook change to negative reflects Griffon's maintenance of an elevated financial risk profile, which modestly worsens pro forma for the leveraging ClosetMaid acquisition," Brian Silver, Moody’s vice president and lead analyst for the company, said in a news release.

The agency said Griffon's financial leverage has increased over the last few years and will rise nearly half a turn more to fund the ClosetMaid transaction.

"Moreover, it is unclear whether and to what degree creditors may benefit from the concurrently announced plan to sell a significant asset (Clopay Plastic Products), particularly in the context of the company's historical financial policies that tend to favor shareholders," Silver added in the release.

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