Research Update: Madison IAQ LLC Rated Preliminary 'B' On Merger, Outlook Stable; Secured And Unsecured Debt Also Rated

U.S.-based Madison IAQ LLC, a global provider of indoor air quality solutions, is issuing $3.4 billion of debt to fund its proposed $3.6 billion acquisition of Melrose PLC's Nortek Air indoor air quality business. The combination of the two businesses will create a highly leveraged but profitable company with over $2 billion of revenue and good market positions in its indoor air quality industry niches. We assigned our preliminary 'B' issuer credit rating to Madison IAQ LLC, our preliminary 'B' issue-level rating to the proposed senior secured debt, and our preliminary 'CCC+' issue-level rating to the proposed unsecured notes. The stable outlook reflects the potential for steady to modestly improving credit metrics over the next year in an environment where

...- U.S.-based Madison IAQ LLC, a global provider of indoor air quality solutions, is issuing $3.4 billion of debt to fund its proposed $3.6 billion acquisition of Melrose PLC's Nortek Air indoor air quality business. - The combination of the two businesses will create a highly leveraged but profitable company with over $2 billion of revenue and good market positions in its indoor air quality industry niches. - We assigned our preliminary 'B' issuer credit rating to Madison IAQ LLC, our preliminary 'B' issue-level rating to the proposed senior secured debt, and our preliminary '###+' issue-level rating to the proposed unsecured notes. - The stable outlook reflects the potential for steady to modestly improving credit metrics over the next year in an environment where an improving domestic economy and a heightened awareness of indoor air quality issues raised by the pandemic are expected to support good demand for Madison IAQ's products....

Research Update