Moody’s rates Authentic Brands loans B1, Caa1

Moody's Investors Service said it assigned ABG Intermediate Holdings 2 LLC's (Authentic Brands Group LLC) $90 million first-lien delayed-draw senior secured term loan B1 and $20 million second-lien delayed-draw senior secured term loan Caa1.

The issuance does not impact the company's existing ratings or stable outlook.

Proceeds from the $110 million of aggregate delayed-draw term loans together with balance sheet cash will be used to fund the $149 million net purchase price for the planned acquisition of the intellectual property of two global accessories fashion brands.

Also, in conjunction with the planned acquisition of the intellectual property of the Nautica brand for a net purchase price of roughly $251 million, the company's existing first- and second-lien term loans will be upsized by an aggregate $300 million, with net cash remaining after transaction-related fees and expenses going to the company's balance sheet.

"Authentic Brands' pending acquisition of Nautica, which will be its largest brand in terms of licensing revenue, together with its planned acquisition of two other global fashion brands, will materially increase the company's size and bolster its already strong EBITDA margins," Moody's vice president and lead analyst for the company, Brian Silver, said in a news release.

"However, the company's pro forma financial leverage is relatively high, resulting in part from the debt funded acquisitions, with deleveraging coming over time as EBITDA grows."

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