Moody’s could lift AV Homes

Moody's Investors Service said it placed all of the ratings of AV Homes, Inc., including its B3 corporate family rating, B3-PD probability of default rating and B3 rating on its senior unsecured notes, under review for upgrade.

The action follows AV Homes' announcement of its upcoming purchase by Taylor Morrison Home Corp. (TMHC), whose bond-issuing entity, Taylor Morrison Communities, Inc., is rated Ba3.

The review was prompted by the proposed acquisition of AV Homes by TMHC. TMHC will acquire all of the outstanding shares of AV Homes' common stock at $21.50 per share in a cash and stock transaction valued (including outstanding AV Homes' debt) at approximately $963 million.

The transaction is expected to close late in the third quarter or early in the fourth quarter.

Moody’s said the proposed acquisition is a strong credit positive for AV Homes in that it will now become part of a larger, more diversified, more highly rated homebuilder. For TMHC, besides an expected $30 million of synergies, the acquisition will permit it to go deeper into five of its attractive existing markets and expand its presence into the first-time and active adult segments.

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