Research Update: SRS Distribution Inc. Downgraded To 'B-' From 'B'; Outlook Stable; New Debt Rated

McKinney, Texas-based roofing and building products distributor SRS Distribution Inc.'s adjusted leverage will elevate to about 7x-8x as the company plans to pay a debt-funded dividend to its equity investors. As part of the transaction, the company intends to issue a $2.04 billion term loan B due in 2028, $650 million senior secured note due in 2028, and $600 million senior unsecured note due in 2029. As a result, we lowered our issuer credit rating on SRS to 'B-' from 'B'. Our outlook is stable. Also, we assigned our 'B-' issue-level ratings to the proposed $2.04 billion term loan B and $650 million senior secured notes, and our 'CCC' issue-level rating to the proposed $600 million senior unsecured notes. The

...- McKinney, Texas-based roofing and building products distributor SRS Distribution Inc.'s adjusted leverage will elevate to about 7x-8x as the company plans to pay a debt-funded dividend to its equity investors. - As part of the transaction, the company intends to issue a $2.04 billion term loan B due in 2028, $650 million senior secured note due in 2028, and $600 million senior unsecured note due in 2029. - As a result, we lowered our issuer credit rating on SRS to 'B-' from 'B'. Our outlook is stable. - Also, we assigned our 'B-' issue-level ratings to the proposed $2.04 billion term loan B and $650 million senior secured notes, and our '###' issue-level rating to the proposed $600 million senior unsecured notes. - The stable outlook indicates our view that S&P Global Ratings-adjusted leverage will remain about 7x-8x with EBITDA interest coverage above 2.5x-3x for the next 12 months on the back of steady demand for residential roofing products and exterior building materials....

Research Update