Moody's rates American Builders loan B1, notes B3

Moody's Investors Service said it assigned a first-time B1 corporate family rating and B1-PD probability of default rating to American Builders & Contractors Supply Co., Inc., the direct, wholly owned operating subsidiary of ABC Supply Holding Corp.

The agency also assigned a B1 (LGD3, 48%) rating to the company's proposed $1.15 billion senior secured term loan B due 2020 and a B3 (LGD5, 86%) rating to its proposed $600 million senior notes due 2021. The outlook is stable.

Proceeds from the term loan and the notes, in addition to $124 million of incremental borrowings under the company's asset-based revolving credit facility, will finance the redemption of the minority shares of ABC currently held by the affiliates of Advent International, Apollo Global Management and the founding family of the legacy Bradco Supply business for $1.4 billion and to refinance existing debt.

The agency said ABC's B1 corporate family rating reflects the company's highly leveraged capital structure following the buyout. The additional debt will raise the company's pro forma adjusted leverage to more than 5.5 times from 1.7 times at Dec. 31.

However, Moody's projects gradual improvement by the end of 2014 based on its expectations for increased volume and gradual debt reduction.

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