Moody's boosts American Tire

Moody's Investors Service said it assigned a B2 corporate family rating to Accelerate Acquisition Corp., along with a B2 rating on the merger sub's proposed senior secured notes and a B2 probability of default rating and SGL-2 speculative grade liquidity rating. The ratings are subject to review of final documents.

Moody's also said it upgraded American Tire Distributors, Inc.'s corporate family rating to B2, probability of default rating to B2 from B3, senior unsecured notes to B3 (LGD5, 72%) from Caa1 (LGD5, 71%) and speculative grade liquidity rating to SGL-2 from SGL-3. The agency said it expects to withdraw the ratings when the transaction closes.

The outlook is stable.

American Tire announced in April that it would be acquired by TPG Capital, LP in a transaction valued at $1.3 billion.

The ratings reflect the longer-term stability of replacement tire demand, as well as the company's leading market position and diverse customer base, Moody's said. These factors drive the company's relatively stable operating performance and credit metrics, the agency said.

The company's free cash flow has been inconsistent over the past several years, mainly due to periods of significant inventory purchases, Moody's added.

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