Moody’s assigns Touchdown, loans B2

Moody's Investors Service said it assigned a long-term B2 corporate family rating and a B2-PD probability of default rating to Touchdown Holdings, Inc. (TenCate Grass Holding BV). Concurrently, Moody's gave B2 ratings to the planned $685 million backed senior secured first-lien term loan due 2031, the €350 million backed senior secured first-lien term loan due 2031, the $150 million backed senior secured first-lien delayed-draw down facility due 2031 and the $150 million backed senior secured revolving credit facility due 2029 all issued by Touchdown Acquirer Inc. The outlook on both entities is stable.

“The B2 ratings reflect TenCate's strong position in the artificial turf market; growing demand for artificial turf supported by many advantages over natural grass; expanding operating margins due to larger scale, synergies and operational leverage; and low capital intensity that supports potential free cash flow generation.

“The ratings also reflect the limited product diversification; strong competition and exposure to public tenders for contracts; serial, mostly debt-funded acquisitions resulting in re-leveraging events and exposure to integration risks; as well as potential risks from adverse environmental regulation,” Moody’s said in a statement.

The proceeds from the backed senior secured first-lien term loan along with $970 million of equity will be applied towards the purchase of TenCate by funds of Leonard Green & Partners, LP, to repay indebtedness, and to transaction-related fees and expenses as well as cash to TenCate's balance sheet.

Moody's forecasts significant deleveraging to well below 5x by 2026. “The stable outlook also assumes that the impact from the ongoing fair competition investigation by the European Commission does not have a material negative impact on TenCate's financial strength,” the agency said in a statement.

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