Moody’s assigns Adams Homes notes B3

Moody’s Investors Service said it assigned a B3 rating to the prospective $225 million senior unsecured notes offering of Adams Homes, Inc. In addition, Moody’s assigned a B3 corporate family rating and a B3-PD probability of default rating to Adams Homes. The outlook is stable.

The proceeds will be used to repay debt including all existing bi-lateral revolving lines of credit, which totals about $187 million, with the remainder used for general corporate purposes. Following the completion of the notes offering, the company expects to put in place a $25 million senior secured revolving credit facility due 2021.

Adams Homes’ B3 corporate family and senior unsecured ratings reflect the company’s relatively small size and scale, geographic concentration in Florida, with over 65% of revenues coming from this state, a modest amount of tangible net worth and expected negative free cash flow over the next 12 months, Moody’s said.

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