S&P rates TGP loans B

S&P said it rated TGP Holdings III LLC’s (Traeger) planned $125 million revolving credit facility, undrawn at close, $510 million first-lien term loan and $50 million first-lien delayed-draw term loan B with 3 recovery ratings. The 3 recovery rating indicates an expectation for meaningful (50%-70%, rounded estimate: 50%) recovery in default.

Traeger will use the term loan proceeds to refinance its capital structure, including to repay its second-lien term loan and the delayed-draw loan to finance future acquisitions and other growth iniatives.

S&P also revised the outlook to positive from stable and affirmed the B issuer rating.

“The positive outlook reflects the possibility that we will raise our ratings on Traeger over the next year if it maintains its improved credit metrics supported by a commitment from its financial sponsor. The company's adjusted leverage declined to 3.5x for the 12 months ended March 31, 2021, from 4.1x for fiscal year 2020, because of an increase in its earnings due to its stronger sales performance. We estimate Traeger's pro forma leverage will be in low-4x area following the close of the transaction and expect it to maintain leverage in the 4x area over the next year,” S&P said in a press release.

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