Moody’s cuts Hillman notes, rates facilities

Moody's Investors Service said it assigned a B2 rating to Hillman Group, Inc.'s proposed senior secured credit facilities, including a $530 million senior secured first-lien term loan due 2025 and a $165 million senior secured delayed-draw term loan.

At the same time, the agency downgraded Hillman's $330 million of senior unsecured notes to Caa2 from Caa1 and affirmed its B3 corporate family rating and B3-PD probability of default rating.

The speculative grade liquidity rating was upgraded to SGL-2 from SGL-3.

The outlook is stable.

Proceeds from the new term loan and a draw on the new $150 million ABL revolver will be used to refinance outstanding amounts under the company's existing credit facilities and pay related transaction fees and expenses. Moody's expects Hillman to use the delayed-draw term loan to fund acquisitions.

"While the increase in debt, which we expect to be utilized for tuck-in acquisitions, is a negative credit development, it will not immediately affect the Corporate Family Rating or the rating outlook, as we expect Hillman's leverage to decline over the next 12-18 months," Vladimir Ronin, Moody's lead analyst for the company, said in a news release.

"Furthermore, the ratings are supported by improvement in the liquidity profile because the new larger five-year ABL revolving facility also addresses the June 2019 expiration of the existing $70 million revolver."

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