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Moody’s: Builders FirstSource loan B3, new notes Caa2
Moody’s Investors Service said it confirmed Builders FirstSource, Inc.’s B3 corporate family rating and B3-PD probability of default rating following news that the company is acquiring ProBuild Holdings, LLC for about $1.63 billion.
Moody’s also said it upgraded the company’s existing senior secured notes due 2021 to B3 (LGD 4) from Caa1 (LGD 4) and assigned a B3 (LGD 4) rating to Builders’ proposed $550 million senior secured term loan due 2022 since these credit facilities are pari passu to each other in a recovery scenario.
The agency also said it assigned a Caa2 (LGD 5) to the proposed $750 million senior unsecured notes due 2023.
The company’s SGL-3 speculative grade liquidity rating also was affirmed.
The outlook is stable.
The acquisition creates one of the largest rated building-products distributor based on revenue, Moody’s said.
The combination creates a national distributor with more product offerings, which should give the company more exposure to repair- and remodeling-activity and reduce reliance on new residential construction, the agency said.
Risks for the transaction include integration costs, which could delay the realization of anticipated cost synergies, Moody’s said.
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