S&P affirms Varsity Brands on debt add-on

Standard & Poor’s said it affirmed Varsity Brands Holding Co. Inc.’s B corporate credit rating.

The outlook is stable.

Varsity Brands and Hercules Achievement Inc., collectively known as Varsity Brands, plan to issue $125 million incremental debt consisting of a $75 million first-lien loan and $50 million second-lien loan.

The proceeds will be used to fund tuck-in acquisitions.

The ratings reflect the company’s leadership position even in fragmented and competitive markets, S&P said, along with its highly leveraged financial risk profile.

The company’s debt leverage is expected to steadily decline to the low-5x range over the next 12 months, the agency said.

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