S&P rates Varsity loan B, changes view

S&P said it affirmed the B corporate credit rating on Varsity Brands Holding Co. Inc. and revised the outlook to negative from stable.

The agency also assigned a B issue-level rating to the company's proposed $1.125 billion first-lien term loan due 2024. The recovery rating is 3, reflecting an expectation for meaningful (50%-70%, rounded estimate 60%) recovery in the event of a payment default.

Varsity Brands and Hercules Achievement Inc. are co-borrowers under the senior secured term loan.

The agency said it estimates the proposed dividend recapitalization will increase pro forma adjusted debt to EBITDA to above 8x from the high-6x area currently.

“The negative outlook reflects the deterioration of Varsity Brands' credit metrics due to the proposed dividend recapitalization and the potential risk the company will be unable to improve leverage in line with our forecast,” S&P said in a news release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.