Moody’s gives Woof B3, loans B2, Caa2

Moody’s Investors Service said it assigned initial corporate family and probability of default ratings of B3 and B3-PD, respectively, to new issuer Woof Holdings, Inc. Woof was formed by private equity firm Clearlake Capital Group, LP to acquire Wellness Pet Food Holdings from Berwind Corp.

Concurrently, Moody’s assigned debt instrument ratings of B2 and Caa2, respectively, to the proposed $720 million seven-year first-lien term loan and $265 million eight-year second lien term loan that are being arranged to help fund the acquisition. The proposed capital structure will include a $100 million five-year asset-based lending revolving credit facility, undrawn at close, that Moody’s will not rate.

“Woof Holdings’ B3 CFR rating reflects its closing high financial leverage of roughly 7.3x, small size (as measured by annual revenue of less than $500 million), limited product diversity, and high revenue concentration in pet specialty channels, which will continue to experience long-term traffic declines,” the agency said in a press release.

The outlook is stable. The outlook reflects an expectation Woof will grow revenue and earnings in a low-to-mid single-digit percentage range in 2021 and sustain good liquidity supported by high EBITDA margins and roughly $30 million of annual free cash flow, Moody’s said.

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