Moody's rates Herff loans B2

Moody's Investors Service said it assigned a B2 corporate family rating and a B3-PD probability of default rating to Herff Jones, Inc. and B2 (LGD3, 33%) ratings to the company's proposed $700 million of senior secured credit facilities, comprised of a $150 million revolving credit facility due 2018 and a $550 million term loan due 2019. The outlook is stable.

Herff Jones plans to acquire BSN Sports, Inc. for an enterprise value of $460 million. Proceeds from the proposed credit facilities will be used to finance the acquisition, to refinance Herff Jones' and BSN's existing debt and to fund seasonal working capital needs and ESOP share repurchase obligations.

The agency said Herff Jones' B2 corporate family rating reflects the company's high leverage associated with the acquisition of BSN, with the pro forma lease-adjusted debt-to-EBITDA ratio estimated to be around 4.75 times for the trailing 12 months ended April 30.

The rating also reflects the expectation for good liquidity and acknowledges the strategic benefits of the transaction, including the broadening of Herff Jones' product and brand portfolio as well as increasing Herff Jones' already credible share within its market, Moody's said.

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