S&P rates Oldcastle B, loans B, CCC+

S&P said it assigned B ratings to Oscar AcquisitionCo LLC (Oldcastle BuildingEnvelope Inc.) and its planned first-lien and other senior secured debt. Additionally, the agency gave a CCC+ rating to the company’s planned senior unsecured debt.

KPS Capital Partners is buying Oldcastle from CRH plc. To fund the deal, the company will issue an unrated $340 million secured revolving credit facility, undrawn at close, a $1.285 billion senior secured first-lien term loan, $400 million in other senior secured debt and $585 million in other senior unsecured debt.

“OBE's scale and niche product focus are key risks, partially offset by brand recognition for its products and high service that drive its strong profitability. OBE has limited scale, with annual revenues of about $1.8 billion, as well as a narrow product focus within a subsegment of the building materials industry. The company operates in a highly competitive and fragmented industry, and we view its scale to be meaningful compared to direct peers in glazing products. Still, we regard OBE as smaller than higher-rated building materials peers,” S&P said in a press release.

The outlook is stable. “The stable outlook reflects our view that improved earnings driven by price realizations and some recovery in commercial construction activities will alleviate the increased debt load, such that adjusted leverage is 6x-7x over the next 12 months,” the agency said.

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