Moody's assigns Holley, loans B2

Moody's Investors Service said it assigned Holley Inc. a B2 corporate family rating, a B2-PD probability of default rating and a B2 senior secured rating to the company's expected first-lien credit facilities, which are to consist of a $125 million revolver, a $600 million term loan and a $100 million delayed-draw term loan. Moody's also assigned an SGL-2 speculative grade liquidity rating.

“Holley's ratings reflect the company's strong competitive position in the niche market for performance automotive aftermarket products, moderate financial leverage and good liquidity. Holley became a publicly-traded company in July 2021 following the completion of its business combination with Empower, Ltd., a special purpose acquisition company (SPAC). As part of the SPAC transaction, Holley paid down $100 million of debt, resulting in pro forma debt/EBITDA of 3.9x at the end of June 2021,” Moody’s said in a press release.

Holley will use the proceeds to repay the company's $540 million first-lien term loan, $45 million second-lien term loan and related transaction fees in a leverage neutral transaction. The credit facilities are issued at subsidiary Holley Purchaser, Inc. All ratings at Holley Purchaser will be withdrawn after the refinancing is completed.

The outlook is positive, reflecting the potential for Holley to deliver on its stated financial policy goals as a public company, which if executed could support debt/EBITDA being maintained below 4x on a Moody's adjusted-basis, the agency said.

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