S&P gives Conair, loan B

S&P said it gave B ratings to Conair Holdings LLC and its planned $1.165 billion first-lien term loan. The recovery rating on the term loan is 3, indicating meaningful recovery (50%-70%; rounded estimate: 55%) in default.

American Securities LLC will use the loan and the proceeds from a $430 million second-lien term loan to help it acquire Conair. The company also plans to secure a $400 million asset-based lending facility expected to be undrawn at close.

“Our ratings on Conair reflect its good market positions in unrelated consumer discretionary categories that are highly competitive and somewhat cyclical. Conair owns a wide portfolio of products including hair care appliances, grooming devices, and other beauty products in its personal care segment (about 60% of sales) and small kitchen appliances and cookware, as well as commercial foodservice equipment, in its culinary segment (about 40%),” S&P said.

The outlook is stable, reflecting an expectation for steady organic sales growth over the next couple of years but sustained weak credit metrics. S&P said it forecasts adjusted leverage sustained above 6x over the next couple of years.

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