S&P elevates Vista Outdoor

S&P said it raised its issue-level rating on Vista Outdoor Inc.'s senior unsecured debt by one notch to B+ from B following the pay down of a portion of its senior secured term loan A during the second quarter and subsequent refinancing transaction.

In addition, S&P revised the recovery rating on the unsecured debt to 3 from 5, reflecting an expectation for meaningful recovery (50%-70%; rounded estimate: 60%) in the event of a payment default. The company repaid $143 million of its senior secured term loan A in the second quarter before subsequently refinancing the remaining $400 million principal balance and its $200 million revolving credit facility with a $450 million asset-based lending (ABL) revolving credit facility due 2023 (unrated), a $109 million ABL term loan due 2023 (unrated), and a $40 million second-lien term loan due 2023 (unrated).

While the refinancing transaction was largely leverage neutral, the reduction in the company's overall level of senior secured debt increases the net value available to senior unsecured creditors, improving their recovery prospects, S&P said in a news release.

At the same time, S&P said it withdrew the BB issue-level rating and 1 recovery rating on Vista's senior secured facilities, including the $200 million revolver and $400 million (outstanding) term loan A, because they were completely repaid during the refinancing.

The funds for the $143 million debt repayment were generated from the sale of the company's eyewear business in the second quarter, which is part of management's strategic transformation plan to right size the business.

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