Moody's assigns Huws Gray, loans B2

Moody's Investors Service said it assigned a first-time B2 corporate family rating and a B2-PD probability of default rating to Patagonia Bidco Ltd. (Huws Gray), an independent general builders merchant (GBM) distributor. Concurrently, Moody's gave a B2 rating to the senior credit facilities, comprising term loan tranches, split in euros and British pounds) totaling equivalent £950 million and a £125 million revolving credit facility, to be borrowed by Patagonia.

“Huws Gray B2 CFR is also supported by (1) the increased scale, geographic reach and revenue diversity that the Fleming acquisition will give; (2) scope for both cost synergies and a gradual improvement in revenues and margins within Fleming as Huws Gray best practices are applied; and (3) Moody's expectations of deleveraging and positive free cash flow (FCF) generation,” the agency said in a press release.

The rating also considers the company’s relatively small size, geographic concentration, the risks of integrating Fleming, the pro forma leverage of 6x and the possibility of more debt-funded acquisitions.

Term loan proceeds will be used in connection with the change in Huws Gray ownership under which Blackstone acquired a majority stake in the company and the agreed acquisition of Grafton plc.

The outlook is stable.

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