S&P puts Miter on positive watch

S&P said it placed its ratings for MI Windows and Doors LLC, (Miter Brands), including the BB issue rating on the company's secured debt issued by Miter and its subsidiary MWD Holdco II LLC, and the B rating on the senior unsecured debt issued by the same subsidiary on CreditWatch with positive implications.

Miter agreed to buy competitor PGT Innovations Inc. for about $3.1 billion.

“The combination of the two competitors supports our overall view of business risk as fair. We estimate the combined company will generate well over $3 billion of revenue annually. Improved scale and product share should provide some purchasing and distribution advantages.

“MI Windows and Doors' leverage provides a degree of capacity for additional debt. Debt to EBITDA has been at or only slightly above 2x recently. While the ultimate financing of this acquisition is uncertain, we could take a more favorable view of financial risk if it is ultimately funded with sufficient equity to maintain debt to EBITDA below 4x,” S&P said in a press release.

The agency said it aims to resolve the CreditWatch listing when the transaction closes, which the company expects to occur in the middle of 2024.

“We could raise our issuer credit rating if we forecast leverage to remain below 4x EBITDA at that time. Upgrades of the secured and unsecured debt would be further predicated on our recovery estimates for the respective securities remaining relatively unchanged from current levels,” S&P said.

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