Moody’s rates Floor & Decor CFR, loan B2

Moody's Investors Service said it assigned a B2 rating to Floor & Decor Outlets of America, Inc.'s proposed $300 million guaranteed senior secured term loan B.

The agency also assigned a B2 corporate family rating and B2-PD probability of default rating.

The outlook is stable.

Proceeds from the proposed $300 million term loan along with $50 million of revolver borrowings will be used to fund a $175 million dividend to shareholders and repay about $164 million of outstanding debt. The company will also be entering into an amended $200 million ABL revolver (unrated) concurrently with the proposed new term loan.

Moody’s said the B2 corporate family rating reflects Floor & Decor’s relatively high initial leverage pro forma for the proposed refinancing, particularly in relation to its relatively modest scale and limited geographic diversity with concentration in Florida and Texas.

The ratings also factor in the cyclical nature of its core target market – home remodeling – and aggressive growth strategy versus historic levels, the agency added.

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