S&P: B to Kirk Beauty additional term loan

S&P said it affirmed the B long-term corporate credit rating Kirk Beauty One GmbH.

The outlook is stable.

At the same time, the agency assigned a B issue level rating and 3 recovery rating to Kirk Beauty's proposed additional €300 million term loan B (TLB) facility, increasing the total amount borrowed under the loan to €1.67 billion. The 3 recovery rating indicates an expectation of meaningful recovery (50%-70%; rounded estimate: 50%) in the event of payment default.

S&P also affirmed the B issue ratings on Kirk Beauty's existing senior secured debt. The recovery rating is unchanged at 3, indicating an expectation of meaningful recovery (50%-70%; rounded estimate: 50%) in the event of payment default. It affirmed the issue ratings on the senior unsecured notes at CCC+. The recovery rating is unchanged at 6, with expected recovery of 0%.

Kirk Beauty recently announced the acquisition of the Limoni and LaGardenia, following the announcement of the acquisition of Bodybell in March 2017. The company intends to issue a new €300 million facility under its existing €1,370,000,000 term loan B to fund the acquisitions at a 3.25% margin; simultaneously, the remaining term loan B is to be repriced to 3.5% from 3.75% previously.

S&P said it estimates that, following the transaction, Kirk Beauty will generate positive free operating cash flow (FOCF) and expand its earnings such that its weighted-average credit metrics remain broadly comparable with the level previously expected.

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