Moody’s raises Summit, debt; rates notes Caa1

Moody's Investors Service said it assigned a Caa1 rating to Summit Materials LLC's proposed $250 million senior notes.

At the same time, the agency upgraded the company’s corporate family rating to B2 from B3, probability of default rating to B2-PD from B3-PD, senior secured revolving credit facility to Ba3 from B1, senior secured term loan B to Ba3 from B1 and senior unsecured notes to Caa1 from Caa2.

The outlook is stable.

Proceeds from the note offering will be used to fund the acquisition of Boxley Materials Co., replenish cash used for the acquisition of American Materials Co. and to pay fees associated with the offering and acquisitions. On Feb. 22, Summit announced that it signed a definitive agreement to acquire Boxley. It acquired American Materials on Feb. 5.

Moody’s said the upgrade reflect Summit's growth in scale, expanded geographic diversity and improvement in key credit metrics over the last two years. Total revenue has grown to $1.4 billion for the year ended Jan. 2 from $916 million at year-end Dec. 28, 2013, and operating margin has improved to 11.1% from 4.1% over the same period.

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