Moody's rates Bauer loan B2

Moody's Investors Service said it assigned a B1 corporate family rating, a B1-PD probability of default rating and an SGL-2 speculative grade liquidity rating to Bauer Performance Sports Ltd. and a B2 (LGD 4, 66%) rating to its new $450 million senior secured term loan. The outlook is stable.

Term loan proceeds will be used to repay existing debt and acquire the baseball/softball business of Easton-Bell for $330 million.

The agency said Bauer's B1 corporate family rating reflects its modest size with pro forma revenue around $600 million, narrow product focus in sports equipment and apparel, moderately high leverage of more than 5 times and its acquisitive nature.

The rating also reflects Bauer's strong brand awareness among action sport enthusiasts and the general stability of demand during periods of economic stress, Moody's said.

Strong EBITA margins of around 15%, solid interest coverage of over 3 times together with the agency's expectation of around $30 million to $40 million of free cash flow help to support the rating, but Moody's said better-than-typical credit metrics are needed for the rating category given Bauer's small scale and the discretionary nature of its business.

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