S&P rates Weber-Stephen, facilities B

S&P said it gave Weber-Stephen Products LLC and its planned senior secured first-lien credit facilities B ratings. The recovery rating on the facilities is 3 indicating an expectation for meaningful (50%-70%, rounded estimate: 65%) recovery.

The company is refinancing its capital structure. Proceeds will be used to add liquidity for potential acquisitions or dividends to shareholders. The capital structure will include a $300 million five-year revolving credit facility, undrawn at close, and a $1.20 billion seven-year senior secured first-lien term loan B.

“Although the company’s pro forma leverage for this transaction is not as high as similar transactions for sponsor-owned companies, we believe future M&A and/or shareholder returns are likely to continue, which will keep the company from materially deleveraging. Upon the closing of the transaction, we estimate Weber’s pro forma fiscal 2020 debt to EBITDA to be approximately 6x on an adjusted basis, and we forecast it will decrease to 5x-5.5x by the end of fiscal 2021,” S&P said in a press release.

The outlook is stable.

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