Moody's rates American Greetings loans Ba2

Moody's Investors Service said it assigned Ba2 (LGD2, 28%) ratings to American Greetings Corp.'s $400 million senior secured term loan due 2019 and $200 million senior secured revolving credit facility due 2018 and affirmed the company's corporate family rating at B1, probability of default rating at B1-PD, $225 million senior notes at B3 (LGD5, 81%), $400 million secured revolver at Ba2 (LGD2, 21%) and speculative grade liquidity rating at SGL 2. The outlook is stable.

The new credit facilities will be issued in connection with the management buyout by a group led by Chairman Morry Weiss, chief executive officer Zev Weiss and chief operating officer Jeffrey Weiss in a deal valued at around $1 billion. This transaction raises American Greetings' pro forma debt-to-EBITDA ratio to just under 5 times from around 2.7 times as of Feb. 28.

The agency said American Greetings' B1 corporate family rating reflects the business risks inherent in the greeting card industry, which is characterized by low or in some cases declining growth rates; its modest size with revenue around $1.9 billion; integration of its June 2012 acquisition of Clinton Cards; weak consumer branding; and heavy competition.

The ratings are supported by the company's position in the U.S. greeting card industry as one of the two leading companies, its long operating history of over 100 years, predictable demand for its products and important relationships with retail customers,. Moody's said.

© 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.