S&P gives American Greetings loan B+

S&P said it assigned its B+ issue-level rating to American Greetings Corp.'s planned $282 million senior secured term loan B. The recovery rating on the term loan is 2, indicating substantial (70%-90%; rounded estimate: 85%) recovery in default.

“The proposed maturity extension to 2026 from 2024 mitigates our prior concerns for refinancing risk as the term loan was scheduled to become a current obligation in April 2023,” S&P said in a statement.

The agency said it sees the company keeping its leverage in the 5x area over the longer term, citing its majority ownership by CD&R.

“Although the company has taken initiatives to reduce its debt load through optional prepayments, we believe leverage improvement will be driven by EBITDA base expansion rather than debt repayment, as we expect the company to benefit from continued implementation of its cost-savings initiatives. Furthermore, we do not rule out the possibility of material debt-funded dividends in the future given the sponsor's history of extracting debt-funded returns from the company and view this as a potential risk factor to our rating,” S&P said.

The outlook is stable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.