Moody's eyes PrimeSource for downgrade

Moody's Investors Service said it placed Park River Holdings, Inc.'s, operating as PrimeSource Building Products, Inc., ratings on review for downgrade including the B1 rating on the company's senior secured term loan and the Caa1 ratings on the senior unsecured notes.

The review follows an announcement that PrimeSource agreed to acquire Wolf Home Products from affiliates of Tenex Capital Management. The deal terms are not publicly available currently.

“The proposed transaction is a credit negative, despite potential revenue and synergy benefits, since PrimeSource's leverage could increase shortly after the company's debt-financed acquisition of Nationwide Enterprises, Inc. (Nationwide). PrimeSource completed the purchase of Nationwide less than four weeks ago,” Moody’s said in a press release.

The review will focus on PrimeSource's new capital structure, deleveraging strategy and liquidity after the Wolf acquisition. “Moody's believes that leverage will exceed 6.5x, to which Moody's previously projected leverage would approach at year-end 2022 and the previously identified downward rating trigger,” the agency said.

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