S&P rates Mohawk notes BBB

Standard & Poor’s said it assigned a BBB rating to Mohawk Industries Inc.’s proposed euro-denominated senior notes.

The proceeds will be used to partially fund its acquisition of IVC Group, S&P said.

Under the baseline scenario for 2015 and assuming the transaction closes in the second quarter of this year, S&P said it expects pro forma debt-to-EBITDA leverage of about 2.5x, still well within parameters for an intermediate financial risk assessment.

As it has done with past acquisitions, Mohawk is expected to use its substantial cash flow to reduce leverage to 2x or less by the end of 2016, the agency said.

Mohawk also recently enhanced its current liquidity by increasing the size of its $1 billion revolving credit facility to $1.8 billion, S&P added.

The ratings reflect the combination of the company’s satisfactory business risk and intermediate financial risk profiles, the agency said.

The ratings also consider its strong market positions in carpet, ceramic tile and laminate flooring in North America and Europe, extensive distribution system and improving profitability, S&P said.

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