Moody's eyes Latham for upgrade

Moody's Investors Service, ("Moody's") placed the ratings of Latham Pool Products, Inc. on review for upgrade, including the B2 corporate family rating and the B2 rating on the company's senior secured first-lien credit facilities.

“This follows Latham Group, Inc.'s (Latham Group the indirect parent company of Latham) amendment to its registration statement for its planned initial public offering (IPO) of shares of its common stock that Moody's views as credit positive because the company plans to use some of the proceeds to repay outstanding debt,” the agency said in a press release.

IPO proceeds are expected to be about $365.7 million and Latham plans to use $152.7 million to partially repay its first-lien term loan, $16 million to fully repay borrowings outstanding on its revolving credit facility, $172 million to repurchase common shares and $25 million for general corporate purposes, including funds for working capital.

Pro forma for the IPO and expected debt reduction, Latham's debt/EBITDA leverage will drop by almost two turns to 2.8x as of fiscal year-end Dec. 31, down from 4.5x pre-IPO and pro forma for the February 2021 incremental term loan, the agency noted.

The review will focus on Latham's actual financial leverage following the initial public offering transaction, financial policies as a public company, debt mix, and operating strategy, Moody’s said.

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