S&P rates Club Car, loan B, notes CCC+

S&P said it assigned B ratings to Club Car LLC and its planned $775 million senior secured term loan and a CCC+ rating to its proposed $450 million of senior unsecured notes. The loan’s recovery rating is 3 and the notes’ recovery rating is 6. The loan and notes will be issued by holding company MajorDrive Holdings IV LLC, which also plans to secure a $100 million asset-based lending facility.

Platinum Equity will use the loan and note proceeds to help it buy Ingersoll Rand Inc.’s specialty vehicle technologies segment for $1.68 billion.

“Our issuer credit rating reflects Club Car's high leverage, financial-sponsor ownership, participation in the cyclical golf and consumer markets, concentrated manufacturing footprint, and narrow product focus in golf carts and other low-speed vehicles, which are partially offset by its leading market position and strong brand recognition, good distribution strategy, track record of successful product introductions, and solid free cash flow generation,” S&P said in a press release.

The agency assigned a stable outlook. Despite the company's leverage exceeding the 7x downgrade threshold in 2021 following the leveraged buyout, the agency said it expects Club Car to increase its revenue and earnings on favorable industry trends, recent new product introductions and investments in operational improvement initiatives, which may decrease leverage to the mid-6x area by the end of 2022.

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