S&P gives B to Touchdown, loans

S&P said it gave B ratings to Touchdown Acquirer Inc. and its planned $685 million and €350 million term loans. The recovery rating is B (50%). Additionally, the structure will include a revolving credit facility of $150 million and a $150 million delayed-draw term loan. The outlook is stable.

Private equity firm Leonard Green & Partners agreed to buy TenCate Grass Holding BV for about $2 billion after fees and expenses. It will finance the deal with the term loans and contribute $970 million in equity. The funds will be used to purchase equity, repay the debt, pay transaction-related fees, and add $15 million in cash on the balance sheet after the deal closes, which is expected to happen in the first quarter of 2024.

“We forecast TenCate's leverage will remain elevated under the new ownership, with adjusted debt to EBITDA of about 5x over the next 12 months. We forecast adjusted debt to leverage will be about 5.2x in 2024 and about 4.6x in 2025, given our expectation of an increasing EBITDA generation and the successful integration of recent acquisitions. We expect inorganic growth will remain a crucial element of the group's strategy, with a concentration on small bolt-on acquisitions,” S&P said in a press release.

The agency added, “TenCate continues to demonstrate a strong operating performance, with a 37% revenue increase in 2023, supported by a vertical integration strategy and favorable demand trends. TenCate's reported strong growth primarily resulted from its expansion in the U.S., successfully executed price increases, and operational improvements.”

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