Moody's puts Wabash on upgrade review

Moody's Investors Service said it placed the B1 senior secured rating of Wabash National Corp. under review for upgrade.

The review was prompted by recent news that the company will primarily use debt to acquire Supreme Industries, Inc., which is valued at $364 million in equity, Moody's said.

The corporate family rating of Ba3 and probability of default rating of Ba3-PD are unchanged.

Moody's also said it affirmed the SGL-1 speculative grade liquidity rating.

The outlook is stable.

The transaction is expected to close in the fourth quarter of 2017, subject to customary regulatory approvals, the agency said.

The planned purchase of Supreme continues Wabash's strategy of diversifying from its core business of manufacturing heavy duty trailers through a unit that has low margins and sells to a highly cyclical market, Moody's explained.

Supreme focuses on truck bodies for the class 2-5 trailer market, which has seen somewhat less volatility in demand, the agency said.

Wabash's debt-to-EBITDA ratio is expected to approach the mid 2x range, pro forma for the incremental debt and Supreme's trailing profits, Moody's said.

This higher leverage level would be in line with expectations, the agency noted.

Both Wabash and Supreme have a record of profitability and solid cash flow, Moody's added.

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