Research Update: Dental Corp. Of Canada Inc. Assigned 'B-' Rating, Stable Outlook; Debt Ratings Assigned

Consumer-focused private equity firm L Catterton is acquiring Toronto-based dental support organization (DSO) Dental Corp. of Canada Inc. (dentalcorp). The transaction will be funded by new first-lien and second-lien secured facilities, cash, and rollover equity. We are assigning a 'B-' corporate credit rating to dentalcorp. The outlook is stable. We are also assigning a 'B-' issue-level rating and '3' recovery rating to the proposed first-lien secured revolver and term loans and a 'CCC' issue-level rating and '6' recovery rating to the proposed second-lien secured term loans. The stable outlook reflects our expectation that the company will continue to pursue acquisitions that will drive double-digit revenue growth and that EBITDA margins will remain stable. At the same time, we expect the

...+ Consumer-focused private equity firm L Catterton is acquiring Toronto-based dental support organization (DSO) Dental Corp. of Canada Inc. (dentalcorp). + The transaction will be funded by new first-lien and second-lien secured facilities, cash, and rollover equity. + We are assigning a 'B-' corporate credit rating to dentalcorp. The outlook is stable. + We are also assigning a 'B-' issue-level rating and '3' recovery rating to the proposed first-lien secured revolver and term loans and a '###' issue-level rating and '6' recovery rating to the proposed second-lien secured term loans. + The stable outlook reflects our expectation that the company will continue to pursue acquisitions that will drive double-digit revenue growth and that EBITDA margins will remain stable. At the same time, we expect the company's aggressive debt-financed growth strategy will keep adjusted leverage above 8x through fiscal 2019....

Research Update