Moody's assigns B2 to AHF loan

Moody's Investors Service said it assigned a B2 rating to AHF Parent Holding, Inc.'s $70 million incremental senior secured first-lien term loan due 2028.

All other ratings for the company remain unchanged, the agency said, including the B2 corporate family rating, the B2-PD probability of default rating and the B2 rating on the $215 million original principal amount senior secured first-lien term loan due 2028.

AHF plans to use the proceeds towards future acquisitions. AHF's "growth through acquisition" strategy is as an aggressive use of leverage because it utilizes debt and increases the company's financial leverage amidst industry headwinds. AHF is also using cash from the balance sheet to partially fund acquisitions.

“Moody's estimates AHF's financial leverage is high with debt/EBITDA (all ratios Moody's-adjusted unless otherwise stated) at 4.5x as of the last 12 month (LTM) period ending June 30, 2023 and pro forma for the incremental term loan. In addition, the incremental debt follows the company's $22 million dividend distribution to shareholders during 2Q-2023 that was funded with cash on hand. The dividend is an aggressive financial policy move at a time when the industry demand is weak and the company remains acquisitive,” the agency said in a press release.

The outlook remains negative.

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