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Moody's rates Truck Hero notes B2
Moody's Investors Service said it affirmed the ratings of Truck Hero, Inc.'s corporate family rating at B3 and probability of default rating at B3-PD.
In a related action, Moody's said it assigned a B2 (LGD 3) rating to the proposed $335 million senior secured notes and affirmed the B2 (LGD 3) ratings of the first-lien senior secured credit facilities, which includes a $100 million revolving credit facility and $855 million term loan.
The agency also affirmed the Caa2 rating of the company's $295 million second-lien senior secured term loan. The loss given default rating was revised to LGD 6 from LGD 5.
The outlook is stable.
The proceeds from the $335 million senior secured notes are to be used to acquire Lund International, Inc.
Lund designs, manufactures and markets branded automotive aftermarket accessories for light and heavy duty trucks, sport utility vehicles, crossover utility vehicles, jeeps, vans and passenger vehicles, Moody's said.
The ratings reflect Truck Hero's considers the company's continuing high leverage following the acquisition of Lund, aggressive history of acquisitions and the discretionary demand nature of combined company's product portfolio, the agency said.
The company's debt-to-EBITDA ratio as of Dec. 31, 2018 is expected to remain high, although it will modestly improve to about 7x from 7.2x, Moody's said.
Management has taken actions to help offset cost pressures through price increases and hedging activities in 2019, the agency said.
The ratings are supported by Truck Hero's demonstrated track record of good organic annual revenue growth over the recent years and a good record on integrating acquisitions, Moody's said.
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