S&P gives LBM, loan B, notes CCC+

S&P said it assigned B ratings to LBM Acquisition LLC (US LBM) and its $1.2 billion first-lien loan and $300 million delayed draw term loan and a CCC+ issue-level rating to its proposed $390 million unsecured notes.

The agency lowered LBM Borrower’s issuer rating to B from B+. Once the proposed transaction closes, S&P said it would discontinue its ratings on LBM Borrower because there will be no debt outstanding at this entity.

“The proposed capital structure will result in LBM's debt leverage rising to over 6x. US LBM's debt will increase to $1.8 billion from $1.1 billion to fund a portion of the acquisition of US LBM by Bain Capital for $2.775 billion. Pro forma for this transaction, we estimate that adjusted leverage at year-end 2020 would be 6.4x,” S&P said in a press release.

The outlook is stable. “The stable outlook is based on our expectation of adjusted leverage sustained in the 6x-7x range over the next 12 months,” the agency said.

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