TEXT-S&P raises Springs Window Fashions term loan rating to 'B+'
Nov 20 - Standard & Poor's Ratings Services today raised its issue-level ratings on Springs Window Fashions LLC's $356.5 million first-lien debt one notch to 'B+' (one notch above the corporate credit rating) from 'B'. At the same time we revised the recovery ratings on this debt to '2', indicating our expectations for substantial (70% to 90%) recovery in the event of a payment default, from '3', reflecting the company's reduced debt levels from required amortization and an excess cash flow sweep. The 'B' corporate credit rating on Springs Window remains unchanged, as do the 'CCC+' issue-level ratings on the company's $125 million second-lien term loan. The recovery rating on the second-lien term debt remains '6', indicating our expectation for negligible (0% to 10%) recovery in the event of a payment default. The ratings on Springs Window reflect our view of the company's "highly leveraged" financial risk profile and "vulnerable" business risk profile. We assess the company's financial policy as very aggressive, supported by a debt-financed dividend and highly leveraged capital structure. We estimate adjusted leverage remains high at about 5.1x at Sept. 30, 2012, compared with the low-3x area prior the dividend in May 2011. Springs Window's narrow business focus in the cyclical window coverings industry, customer concentration, and participation in an intensely competitive industry continue to contribute to the company's vulnerable business risk profile. RELATED CRITERIA AND RESEARCH -- Recovery: Criteria Guidelines for Recovery Ratings on Global Industrials Issuers' Speculative-Grade Debt, Aug. 10, 2009 -- Corporate Ratings Criteria 2008, April 15, 2008 RATING LIST Springs Window Fashions LLC Corporate credit rating B/Stable/-- Issue rating raised; Recovery rating revised To From Springs Window Fashions LLC Senior secured $300 mil. term loan due 2017 B+ B Recovery rating 2 3 $56.5 mil. revolver due 2016 B+ B Recovery rating 2 3 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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