Moody’s rates SiteOne CFR B2, loan B3

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to JDA Holding LLC (to be renamed SiteOne Holding LLC), and a B3 rating to its proposed $350 million first-lien senior secured term loan due 2022.

The outlook is stable.

SiteOne is raising roughly $350 million in first-lien term loan proceeds to fund a $290 million distribution to its existing shareholders and to repay $61 million of the existing term loan due 2019 and a portion of outstanding borrowings under its revolving credit facility. Simultaneously, the company is amending and upsizing its existing $250 million ABL revolving credit facility to $325 million, while extending its maturity to 2020 from 2018.

Pro forma for this transaction, about $137 million of revolver borrowings will remain outstanding.

Moody’s said the B2 corporate family rating reflects the company's debt leverage of roughly 5 times (Moody's-adjusted debt-to-EBITDA), thin operating margins that are common to companies in the distribution business, aggressive financial policies, including a shareholder distribution that will be part of the proposed transaction, as well as long-term risks associated with potential shareholder-friendly actions given the private equity ownership.

The B3 rating on the proposed first-lien term loan reflects SiteOne’s less advantaged position in the capital structure relative to a meaningfully large ABL revolving credit facility that has a first priority security interest in current assets.

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