S&P rates TruGreen loan B

S&P said it affirmed the B issuer credit rating on TruGreen LP, along with the B rating on its senior secured debt at B.

The agency also said it assigned a B issuer credit rating to Outdoor Home Services Holdings LLC, the group's holding company and financial reporting entity.

S&P said it assigned a B issue-level rating to the proposed credit facility with a 3 recovery rating, indicating 50% to 70% expected default recovery.

CD&R, the private equity owner of TruGreen, is purchasing the 30% ownership stake from the Scotts Miracle-Gro Co. for about $234 million, S&P explained.

Therefore, TruGreen is issuing a new $146 million revolver and a $965 million term loan due in 2024.

The loan will be used with about $80 million of cash from its balance sheet to fund the transaction and refinance its first-lien credit facility, resulting in $175 million of incremental first-lien debt, S&P said.

The transaction increases pro forma leverage to the low-6x range at year-end 2018, from low-5x, the agency said.

The stable outlook reflects a view that the company will maintain leverage of 5x to 6x as it benefits from stable operating performance and focuses on tuck-in acquisitions to enhance its organic growth.

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