Research Update: Facilities Management Provider Divisions Holding Corp. Assigned 'B' Rating, Stable Outlook; Debt Also Rated 'B'

Newport, Ky.-based integrated facilities management provider Divisions Holding Corp., doing business as Divisions Maintenance Group (DMG), intends to obtain a five-year first-lien $40 million revolving credit facility and a $365 million seven-year first-lien term loan. Proceeds would be used to repay $189 million of existing debt and fund a $167 million dividend to shareholders, as well as related fees and expenses. We expect DMG to generate revenue of about $475 million for fiscal year 2021, with the business' limited size and scope key drivers of the rating. We assigned our 'B' issuer credit rating to Divisions Holding Corp., the borrower of the proposed debt. We also assigned our 'B' issue-level and '3' recovery ratings to the proposed first-lien debt facilities.

...- Newport, Ky.-based integrated facilities management provider Divisions Holding Corp., doing business as Divisions Maintenance Group (DMG), intends to obtain a five-year first-lien $40 million revolving credit facility and a $365 million seven-year first-lien term loan. - Proceeds would be used to repay $189 million of existing debt and fund a $167 million dividend to shareholders, as well as related fees and expenses. - We expect DMG to generate revenue of about $475 million for fiscal year 2021, with the business' limited size and scope key drivers of the rating. - We assigned our 'B' issuer credit rating to Divisions Holding Corp., the borrower of the proposed debt. We also assigned our 'B' issue-level and '3' recovery ratings to the proposed first-lien debt facilities. - The stable outlook reflects our expectation that DMG will maintain steady credit measures over the next 12 months, including adjusted debt leverage of 5x-6x and free operating cash flow to debt in the mid-single-digit...

Research Update