Ply Gem Industries Inc. And Atrium Windows And Doors Ratings Placed On CreditWatch Following Acquisition Announcement

Stocks and Financial Services Press Releases Thursday February 1, 2018 09:26
On DALLAS--1 Feb--S&P Global Ratings

On DALLAS (S&P Global Ratings) Jan. 31, 2018-- S&P Global Ratings today placed all of its ratings on Cary, N.C.-based Ply Gem Industries Inc., including the 'B+' corporate credit rating, 'BB' senior secured rating, and 'B+' senior unsecured rating, on CreditWatch with negative implications.

The recovery rating on the senior secured debt is '1', indicating our expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of default. The recovery rating on the senior unsecured debt is '4', indicating our expectation of average (30%-50%; rounded estimate: 45%) recovery in the event of default. At the same time, we placed our ratings on Wayne, N.J.-based Atrium Windows and Doors Inc., including the 'B-' corporate credit rating and senior secured ratings, on CreditWatch with positive implications.

The recovery rating on the senior secured debt is '4', indicating our expectation of average (30%-50%; rounded estimate: 45%) recovery in the event of default. Both CreditWatch listings follow CD&R's announcement of plans for CD&R funds to acquire all of the outstanding shares of Ply Gem common stock in a go-private transaction as well as acquire Atrium Windows and Doors and combine the company with Ply Gem. Ply Gem's board of directors unanimously approved the agreement, which provides for the payment of $21.64 per share in cash to all holders of Ply Gem common stock.

The cash purchase price represents a premium of approximately 20% over Ply Gem's closing stock price on Jan. 30, 2018. Promptly following entry into the agreement, stockholders holding greater than 50% of the outstanding shares of Ply Gem common stock executed a written consent to approve the transaction, thereby providing the required stockholder approval. We intend to resolve the CreditWatch placements as the transaction closing approaches and financing arrangements become clear.

We could lower the rating on Ply Gem if we gained further insight into the company's future capital structure and leverage profile and determined that debt to EBITDA would be above 5x. We could maintain the rating on Ply Gem if we believed the capital structure would support debt to EBITDA below 5x. We could raise Atrium's corporate credit rating once we gain further information regarding the combined company's future organizational and capital plans. We could also withdraw the corporate credit and issue-level ratings on Atrium if all of its debt is repaid at the close of the transaction.


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