Moody’s eyes Miter, PGT for downgrade

Moody’s Investors Service said it placed its ratings for MIWD Holdco II LLC (Miter Brands), including its Ba3 senior secured first-lien term loan rating and B3 senior unsecured notes rating, and PGT Innovations Inc., including its B1 senior unsecured ratings, under review for downgrade.

On Tuesday, both companies agreed that Miter will buy PGT for $42 per share or an enterprise value of ab out $3.1 billion. The transaction is expected to close in the middle of 2024 and is subject to customary closing conditions including applicable regulatory approvals.

Miter plans to fund the deal with new debt, equity and cash on hand. The company received commitments for a $1.8 billion term loan, a $325 million asset-based revolving credit facility and $979 million of an equity investment from Koch Equity Development LLC, a current investor in Miter.

Moody’s said it expects the acquisition to be leveraging with PGT’s debt being repaid at close.

“Moody's review will focus on the strategic operating rationale and the trajectory and opportunities of the combined business over the next 12-18 months, Miter's final capital structure, terms of the securities, and the company's ability and willingness to de-leverage, as well as its free cash flow generation capabilities and uses. Lastly, the review for downgrade will also assess Miter's financial performance and the maintenance of solid credit metrics,” the agency said in a statement.

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