Moody's rates Academy loan B2, notes Caa1

Moody's Investors Service said it assigned B2 corporate family and probability of default ratings to Academy, Ltd., a B2 (LGD 3, 49%) rating to the company's proposed $840 million guaranteed senior secured term loan and a Caa1 (LGD 5, 86%) rating on its proposed $450 million of senior unsecured notes.

The outlook is stable.

Proceeds from the proposed term loan and notes, along with common equity contributed by an affiliate of Kohlberg Kravis Roberts & Co LP and rollover equity, will be used to fund the acquisition of Academy by Kohlberg.

Upon consummation of the acquisition, Allstar Sub LLC will be merged with and into Academy, with Academy being the surviving entity and obligor under the term loan and notes, the agency added.

Academy's ratings reflect the company's high pro forma debt levels and weak credit metrics stemming from the proposed acquisition of the company by Kohlberg, the agency said.

The ratings also reflect Academy's small size and limited geographic presence relative to other global retailers as well as the potential challenges inherent in its planned ramp-up of new store growth over the intermediate-term, the agency added.

The ratings favorably reflect the strength of the company's "Academy Sports + Outdoor" brand, its good market position in the region where it operates and its history of maintaining profitable growth despite difficult economic conditions over the past several years, Moody's said.

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