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Global Credit Research - 15 Mar 2011
New York, March 15, 2011 -- Moody's Investors Service assigned a Ba1 rating to Jarden Corporation's
proposed $1.25 billion senior secured credit facility ($250
million revolver, $500 million term loan A and $500
million term loan B). At the same time, Moody's affirmed
all of Jarden's other ratings (Ba3 CFR and PDR, Ba3 senior unsecured
notes, B2 senior subordinated notes and SGL-1 Speculative
Grade Liquidity Rating). The outlook remains stable. The
rating on the existing secured credit facility will be withdrawn upon
closing of the new credit facility.
Proceeds from the new credit facility and cash will be used to refinance
the existing $1,062 million senior credit facility and for
general corporate purposes. Term loan A matures in March 2016 and
has increasing annual amortization payments with 50% due at maturity.
Term loan B matures in March 2018 and amortizes 1% a year with
a bullet due at maturity. The revolver expires in 2016 and allows
for borrowings in both US dollars and Euros.
"The establishment of the new senior secured credit facility is
essentially a leverage neutral event, but improves Jarden's
debt maturity profile by extending $100 million that was due in
2013 to 2016 and extends $500 million to 2018 that was due in 2015,"
said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service.
"While we think Jarden had a strong liquidity profile even without
this new credit facility, increasing the revolver by $100
million to $250 million and extending the maturity dates just further
improves liquidity," Cassidy added.
The Ba3 Corporate Family Rating reflects the company's significant and
increasing scale, its leading market position in various niche branded
consumer products, diverse product portfolio, broad and expanding
geographic diversification, and its strong liquidity profile.
The Corporate Family Rating also reflects the acquisitive nature of the
company and its propensity to increase shareholder returns despite having
relatively high financial leverage at over 5 times. The rating
is constrained by the continued uncertainty in discretionary consumer
spending, especially for low and middle income consumers,
increasing raw material prices and global macro-economic concerns,
highlighted by oil currently around $100 a barrel and increasing
The stable outlook reflects Moody's view that Jarden will grow organically
between 3-5% in the near to mid-term while maintaining
EBITA margins of around 9% or better (currently 9.2%).
The outlook also reflects Moody's assumption that the economic stresses
in Europe and the Middle East will not materially impact Jarden's
international businesses. Moody's also assumed that Jarden
does not pursue debt funded shareholder returns as is its expectation
that debt/EBITDA will be reduced to below 5 times by the end of 2011.
A downgrade is not likely in the near term. However, a material
debt funded acquisition or an unexpected significant shock to the economy
could result in a downgrade. Additionally, a deterioration
in any of the following credit metrics could prompt a downgrade:
1) debt/EBITDA sustained over 5.5 times, 2) low single digit
operating margins, 3) low single digit retained cash flow/adjusted
debt percentages, or 4) the repeated consumption of cash.
A non-strategic acquisition could also prompt a downgrade.
An upgrade could occur if Jarden moderates its acquisition appetite and
its credit metrics significantly improve from their current levels.
For example, debt/EBITDA (currently over 5 times) would need to
be below 4 times and EBITA margins (currently under 10%),
would need to be in the double digits.
$500 million Term Loan A due March 2016 at Ba1 (LGD 2, 18%);
$500 million Term Loan B due March 2018 at Ba1 (LGD 2, 18%);
$250 million revolving credit facility expiring March 2016 at Ba1
(LGD 2, 18%);
Ratings affirmed / LGD assessments revised:
Corporate Family Rating at Ba3;
Probability of Default Rating at Ba3;
$650 million senior subordinated notes at B2 (LGD 5, 83%
$472 million senior subordinated notes at B2 (LGD 5, 83%
$300 million Senior Unsecured Notes at Ba3 (LGD 4, 51%
$293 million senior unsecured notes at Ba3 (LGD 4, 51%
Speculative grade liquidity rating at SGL 1
Moody's subscribers can find further details in the Jarden Credit Opinion
published on Moodys.com.
The last rating action was on November 2, 2010, when Moody's
rated the $300 million unsecured notes Ba3, downgraded the
senior subordinated notes to B2 and affirmed all other ratings,
including the Ba3 CFR and PDR.
The principal methodology used in rating Jarden was the Global Consumer
Durables rating methodology published in October 2010 and Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009. Other methodologies and
factors that may have been considered in the process of rating this issuer
can also be found on Moody's website.
Jarden Corporation is a manufacturer and distributor of niche consumer
products used in and around the home. The company's primary segment
include Consumer Solutions (which distributes kitchen appliances,
and home vacuum packaging systems), Branded Consumables (which distributes
playing cards, arts and crafts, plastic cutlery and firelogs),
and Outdoor solutions (which distributes a variety of outdoor leisure
products under the K2, PureFishing, Coleman and Campingaz
brands). Headquartered in Rye, NY the company reported net
sales of approximately $6 billion for the year ended December 31,
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.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's rates Jarden's senior secured credit facility Ba1 and affirms all other ratings; outlook is stable
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