Moody’s gives Lakeshore, loan B2

Moody’s Investors Service said it gave Lakeshore Intermediate, LLC and its expected $580 million term loan B2 ratings.

Private equity firm, Leonard Green & Partners, LP plans to buy a 55% stake in Lakeshore Learning Materials and will use Lakeshore Intermediate as its vehicle. The Kaplan family, which owns 100% of Lakeshore, will keep the remaining 45% ownership. The transaction will be financed with the new term loan and the equity portion representing 65% of the company's total capital inclusive of the roll over equity from the Kaplan family.

The company also plans to obtain a $100 million asset-based revolver that will not be rated and will be undrawn at close. “Pro-forma for the transaction, the company will have total debt to EBITDA of 5.4x based on Moody's calculation,” the agency said in a press release.

The outlook is stable. Moody’s said it expects Lakeshore's operating performance will remain strong over the next 12 to 18 months as increased government funding for schools to counteract the damage caused by the pandemic continues to drive demand.

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