Moody's gives Burgess B3, loans B2

Moody's Investors Service said it assigned ratings to Burgess Point Purchaser Corp.( BBB Industries LLC), including a B3 corporate family rating and a B3-PD probability of default rating. The agency also assigned a B2 rating to the company's planned first-lien credit facilities, consisting of a $100 million revolving credit facility and a $1.19 billion secured term loan.

Term loan proceeds, unrated second-lien debt and common equity will be used to finance the purchase of a majority stake of BBB by the private equity firm Clearlake Capital Group, LP. After the deal closes, outstanding debt at the currently rated entity GC EOS Buyer, Inc. will be repaid, and Moody's will withdraw all ratings for that entity.

“The ratings reflect BBB's high debt leverage, moderate scale in a competitive industry and expectation for an aggressive financial policy under private equity ownership. BBB's ratings are supported by the company's strong market position in the automotive aftermarket, high profit margins from its remanufacturing process, and good liquidity,” Moody’s said in a press release.

The agency said it estimates BBB's debt/EBITDA to be at about 7x by the end of 2022 compared to about 6.1x debt/EBITDA at end of March 31 (pro forma for recent acquisitions) and forecasts debt/EBITDA to retreat toward 6x by end of 2023 through a combination of earnings growth and moderate debt repayment.

The outlook is stable.

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