S&P rates Red Fox loan B

S&P said it assigned a B rating to Red Fox CD Acquisition Corp.’s planned $500 million first-lien term loan and boosted Cook & Boardman Group LLC’s issuer rating to B from B-. The outlook is stable.

Platinum Equity plans to buy Cook & Boardman, which will push out the maturity of its capital structure by several years removing the previous concern about maturity risk, S&P said. The borrower also plans to secure an unrated $100 million asset-based lending facility due 2028 expected to be undrawn at close.

“We expect Cook & Boardman's debt leverage to be about 5.5x over the next 12 months, which is commensurate with a higher rating. The company has maintained debt leverage below 6x in the last four quarters, with debt to EBITDA of 4.4x for the trailing 12 months ended June 30, 2023. In 2023, despite the higher debt and interest from the transaction, we expect debt leverage of about 5.5x in 2023 and 2024. This compares with 6x in 2022 and 9.3x at year-end 2021.

“The improvement is due to an expected 35%-37% increase in EBITDA in 2023, supported by growth in its end markets in particular new construction and repair and remodel (R&R) spending in education, government, and health care end markets,” the agency said in a statement.

The company will use the term loan along with $368 million in an equity contribution from Platinum Equity to fund the $863 million purchase of Cook & Boardman. The ABS facility is expected to be used for general corporate uses and liquidity purposes.

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