Research Update: Outdoor Home Services Holdings LLC, TruGreen L.P. Ratings Affirmed On Recapitalization; Outlook Stable

U.S.–based lawn and shrub care company Outdoor Home Services Holdings LLC, parent of TruGreen L.P., is recapitalizing to fund a $349 million distribution to shareholders and pay related fees. The proposed largely debt-funded dividend increases pro forma adjusted leverage to about 6x for the 12 months ended July 4, 2020, from 5x. We forecast that fiscal calendar shifts will reduce EBITDA in the back half of the year such that leverage will increase to about 6.6x by year-end, but margin expansion in 2021 will enable the company to deleverage to the low-6x area. We are affirming our 'B' issuer credit rating on Outdoor Home Services Holdings and TruGreen, and maintaining a stable outlook. At the same time, we are assigning

...- U.S.¡based lawn and shrub care company Outdoor Home Services Holdings LLC, parent of TruGreen L.P., is recapitalizing to fund a $349 million distribution to shareholders and pay related fees. - The proposed largely debt-funded dividend increases pro forma adjusted leverage to about 6x for the 12 months ended July 4, 2020, from 5x. We forecast that fiscal calendar shifts will reduce EBITDA in the back half of the year such that leverage will increase to about 6.6x by year-end, but margin expansion in 2021 will enable the company to deleverage to the low-6x area. - We are affirming our 'B' issuer credit rating on Outdoor Home Services Holdings and TruGreen, and maintaining a stable outlook. - At the same time, we are assigning our 'B' issue-level rating to the proposed first-lien revolving credit facility and term loan. The '3' recovery rating reflects our expectation for meaningful (50%-70%; rounded estimate: 50%) recovery for lenders in the event of a default. We are also assigning our...

Research Update