Moody’s ups Kuehg view to positive

Moody's Investors Service said it changed the outlook for Kuehg Corp. (KinderCare Education, LLC) to positive from stable.

At the same time, the agency affirmed the company's B3 corporate family rating, B3-PD probability of default rating and the B2 rating on its first-lien senior secured credit facilities, consisting of a $890 million ($884 million outstanding) term loan due 2022 and an $80 million revolving credit facility due 2020.

Moody’s said the outlook revision reflects the company's positive operating trends and improvements in credit metrics achieved through earnings growth and margin accretion over the last year.

KinderCare Education expects the stepped-up center rationalization started in 2012 to largely be completed by the end of 2017 and the agency anticipates free cash flow will improve in 2018 as the meaningful closure costs wind down to a more normalized level.

KinderCare Education has de-levered through earnings growth to about 5.3 times debt-to-EBITDA in 2016 from 5.9 times a year ago and improved EBITDA less capex to interest coverage to roughly 1.4 times pro forma for the proposed repricing of its first-lien debt from about 1.1 times a year ago, Moody’s explained.

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