Quality Home Brands Holdings LLC #B-# Rating Is Term Loan Recovery Rating Is Revised To #3#

Stocks and Financial Services Press Releases Thursday February 25, 2016 09:12
SAN FRANCISCO--25 Feb--Standard & Poor's
SAN FRANCISCO (Standard & Poor's) Feb. 24, 2016--Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on Quality Home Brands Holdings LLC (QHB). The outlook is stable.

At the same time, we revised our recovery rating on QHB's $160 million first-lien term loan due 2018 to '3' from '4', indicating our anticipation of meaningful (50% to 70%; in the lower half of the range) recovery in the event of a payment default. This is a result of our expectations of continued EBITDA growth stemming from favorable underlying industry trends, which supports a higher valuation. We affirmed the 'B-' issue-level rating on the $160 million first-lien due 2018 and 'CCC' issue-level rating on the company's $70 million senior second-lien term loan due 2019. The recovery rating on the $70 million senior second-lien is '6', indicating our anticipation of negligible (0% to 10%) recovery in the event of a payment default.

"The corporate credit rating on QHB reflects its narrow product focus and high leverage," said Standard & Poor's credit analyst Beverly Correa.
QHB is a niche domestic supplier of residential and commercial lighting products and ceiling fans distributed through mass market retailers, electrical distributors, homebuilders, and specialty showrooms.

The outlook reflects our expectation that QHB will continue to gradually improve profitability and cash flow as it benefits from a strengthening U.S. housing market while maintaining at least 15% EBITDA cushion on its financial maintenance covenants over the next 12 months.

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