Research Update: Lakeshore Learning Materials LLC Incremental First-Lien Debt Rating Affirmed At 'B'; Outlook Stable

U.S.-based Lakeshore Learning Materials LLC plans to raise a new $100 million incremental first-lien term loan that is fungible with its existing $580 million ($571 million outstanding) first-lien term loan due 2028. Loan proceeds will be used to fund a one-time shareholder distribution. The company also plans to upsize its existing asset-based lending (ABL) facility to $150 million from $100 million to support its growth. We do not expect the ABL will be drawn at close. We estimate Lakeshore's S&P Global Ratings-adjusted pro forma leverage will increase to about 3.4x from 2.9x for the 12-months ended June 30, 2023. Nonetheless, Lakeshore's leverage will remain well below our 7x downside trigger for its rating. Therefore, we affirmed our 'B' issuer credit

...- U.S.-based Lakeshore Learning Materials LLC plans to raise a new $100 million incremental first-lien term loan that is fungible with its existing $580 million ($571 million outstanding) first-lien term loan due 2028. Loan proceeds will be used to fund a one-time shareholder distribution. The company also plans to upsize its existing asset-based lending (ABL) facility to $150 million from $100 million to support its growth. We do not expect the ABL will be drawn at close. - We estimate Lakeshore's S&P Global Ratings-adjusted pro forma leverage will increase to about 3.4x from 2.9x for the 12-months ended June 30, 2023. Nonetheless, Lakeshore's leverage will remain well below our 7x downside trigger for its rating. - Therefore, we affirmed our 'B' issuer credit rating and our 'B' issue-level rating on the company's upsized $680 million first-lien term loan facility. Our recovery rating on this debt is a '3', indicating our expectation of meaningful (50%-70%; rounded estimate: 60%) recovery...

Research Update