S&P gives Olaplex B+, loan BB-

S&P said it assigned a B+ rating to Olaplex Inc. and a BB- issue-level and 2 recovery ratings to its planned $675 million term loan. The 2 rating indicates substantial (70%-90%; rounded estimate: 70%) recovery in default. The company’s credit facility will also include a $150 million revolver.

“Our ratings on Olaplex reflect its small scale, narrow business and product focus, and heavy reliance on a key proprietary active ingredient. Olaplex is narrowly focused in the premium specialty hair care sector and has a minimal share of the global hair care market. The company relies on a key, patent-protected active ingredient (bis-aminopropyl diglycol dimaleate, or bisamino) for much of its success. The company's concentrated cash flows are derived by providing premium hair care products to professional hair salons, specialty retailers, and direct to consumers (DTC),” the agency said in a press release.

The agency said it projects S&P Global Ratings' pro forma adjusted leverage will be around 2.4x at close and the company's healthy profit and cash flow generating capacity should enable steady organic deleveraging,

Olaplex intends to use the term loan proceeds and cash on hand to fully repay its $800 million term loan.

The outlook is stable.

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