Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
15 Jul 1998
MOODY'S ASSIGNS B3 RATING TO AXIA INCORPORATED'S SENIOR SUBORDINATED NOTES AND B1 RATING TO ITS SENIOR SECURED CREDIT FACILITIES
New York, 07-15-98 -- Moody's Investors Service assigned a B3 rating to Axia Incorporated's (Axia) $100 million of senior subordinated notes, due 2008, and a B1 rating to its $76.5 million of senior secured credit facilities. This is the first time that Moody's has rated the debt of the company, which operates the following three distinct businesses: Ames (the largest U.S. supplier and distributor of automatic taping and finishing, or "ATF" tools), Nestaway (a producer of formed wire products, particularly dishwasher racks), and Fischbein (a producer of industrial bag closing equipment and flexible conveyors). The outlook is stable.
The ratings reflect the company's high leverage, weak balance sheet, moderate interest coverage, history of leveraged financings, stable, but lackluster consolidated financial performance over the past three years, weighted importance of Ames to the company's credit profile as well as its exposure to the construction cycle, and customer concentration at Nestaway.
However, the ratings also reflect the company's market leadership positions in niche markets; strong return on assets; increasing penetration of the market for ATF products in the eastern part of the U.S.; diverse base of products and markets, as well as high percentage of variable costs - all of which limit the company's downside in a recession scenario; as well as stated commitment from the equity sponsor to support the transaction with additional capital.
The senior secured credit facilities consist of a $35 million, six-year term loan, a $1.5 million, four-year ESOP term loan facility, a $15 million, six-year revolving credit facility, and a $25 million, six-year acquisition facility. The term loan, ESOP loan and $3.3 million of the revolving credit facility is expected to be drawn upon closing. The borrower is Axia Incorporated, the operating company. The B1 rating reflects the benefits and limitations of the collateral package, which consist of all tangible and intangible assets of the company and the stock of its subsidiaries. Drawings under the revolving credit facility are subject to a borrowing base formula. Collateral coverage on a tangible basis will be thin.
The B3 rating on the senior subordinated notes reflects their contractual subordination to senior debt, including outstandings under the secured credit facilities. The notes are also being issued by Axia Incorporated, and are guaranteed on a senior subordinated basis by each of the company's domestic subsidiaries.
The proceeds of the financing package are being used for the buyout of the company by an investor group led by The Sterling Group and management. The total price is $167.8 million (including fees and expenses) which represents a 8.8 times multiple of latest twelve month pro forma EBIT of $19.1 million (6.5 times multiple of latest twelve month pro forma EBITDA of $25.7 million). The total equity contribution will be $28 million. The investor group will own approximately 75-80% of the company post-closing, with the remainder owned by management (on a fully-diluted basis). This is the fourth leveraged financing of the company since 1984, when it underwent its first leveraged buyout. The Sterling Group has indicated that as financial sponsor, it will support this transaction on an ongoing basis, including the addition of capital.
Following this transaction, pro forma debt will be $140 million, a 7.3 times multiple of pro forma EBIT (5.4x coverage of EBITDA). EBIT coverage of pro forma interest of $14 million will a moderate 1.4 times. (1.8x on an EBITDA basis). Annual capital expenditures of $5.3 million will cause EBITDA coverage to fall to 1.5 times. The balance sheet is weak because total assets of $190 million are eroded by $131 million of goodwill, intangibles, and deferred charges, resulting in approximately $60 million of tangible assets and $105 million of negative tangible net worth.
On a consolidated basis, over the past three years revenues have been relatively flat at between $104-$105 million ($107.8 million for the twelve months ended 3/31/98), although operating earnings have increased by approximately 26%, to $19.4 million, producing an impressive 20% return on assets in fiscal 1997. (Pro forma, return on assets will drop by 50%, due to the write-up of total assets, reflecting a substantial increase in goodwill.) Sales increases of 25% at Ames over this time period were offset by a 17% decline at Nestaway, versus flat sales at Fischbein. Sales at Ames accounted for fully 40% of 1997 consolidated sales versus 34% at Nestaway and 25% at Fischbein. Consolidated EBITDA increased by 16%, to $24.1 million. Ames contributed a disproportionately higher percentage of EBITDA, whereas Fischbein was disproportionately lower.
Clearly, consolidated sales and earnings have been driven primarily by Ames, the largest U.S. supplier and distributor of ATF tools. Ames rents tools and also sells them under the "Tapetech" and "Tapemaster" brand names through over 125 distributions locations, (including 57 company-managed stores and 53 franchised operations), allowing professional interior finishing contractors to finish and prepare drywall for painting on a much faster and more efficient basis than traditional hand-taping. Although this application is construction-related (and therefore, highly cyclical), management believes penetration is mostly in the west. The flip side is that management sees an opportunity to increase penetration of the eastern U.S., where most of all drywall taping is done by hand.
Nestaway's operating performance suffered in the last three years by the loss of two OEM customers, who took certain production in-house. Despite this loss, Nestaway maintains a significant market share in the manufacture of formed wire products, producing approximately 68% of all independently manufactured dishwasher racks, and an estimated 17% of all dishwasher racks produced in the U.S. Strong customer concentration is noted in this division, as Maytag accounted for approximately 20% of consolidated 1997 revenue. Nestaway's outlook is positive as a result of increased sales to existing customers and recent new contracts. To this end, Nestaway's first quarter sales increased 20.5% to $10.6 million, reflecting these developments. Furthermore, a repetition of its past three-year performance is unlikely because 90% of Nestaway's 1997 revenues are under contracts through 2002 and beyond.
Fischbein, (with sales of approximately $27 million), has experienced modest growth in the past three years (6%, net of discontinued operations and certain currency items), reflecting the mature nature of the division's industrial bag closing equipment, which consists primarily of sewing systems, parts, and supplies for heavy-duty, industrial capacity bags. This division also manufactures flexible conveyors as well as warehouse storage racks. Fischbein differs from the company's other two businesses in that over half of its sales are in a broad number of international markets, increasing the geographic diversity of the company's revenue base.
On a consolidated basis, Moody's believes the company's businesses are sufficiently diversified across business lines, customers, and geographically to reasonably support its leverage, even in a recession scenario. Sensitizing for a decline in revenues and margins for each of the businesses (mirroring historical declines) would produce a consolidated decline in revenues and EBITDA of approximately 14.6% and 17%, respectively, under Moody's downside case. In that event, the company would still produce approximately $21.6 million of EBITDA, sufficient to cover $14 million of interest and $5 million of annual capital expenditures. Moody's believes margins would be less impacted than revenues in a recession, because a high percentage of the company's costs are considered variable.
Axia Incorporated, located in Lombard, Illinois, operates the following three distinct businesses: Ames (the largest U.S. supplier and distributor of automatic taping and finishing, or "ATF" tools), Nestaway (a producer of formed wire products, particularly dishwasher racks), and Fischbein (a producer of industrial bag closing equipment and flexible conveyors). For the twelve months ended 3/31/98, the company produced net revenues and pro forma EBITDA of $107.8 million and $25.7 million, respectively.
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.