Standard & Poor's says Ply Gem's B- corporate credit rating, stable rating outlook won't be immediately affected by its S-1 filing for potential IPO
June 1, 2010
– Standard & Poor's Ratings Services today said that its 'B-' unsolicited corporate credit rating and stable rating outlook on Cary, N.C.-based Ply Gem Industries Inc. would not be immediately affected by the window and siding manufacturer's filing of an S-1 for a potential IPO.
Ply Gem expects to use proceeds from the IPO for the repayment of debt, such as portions of the 11.75% senior secured notes due 2013 and the 13.125% senior subordinated notes due 2014. However, at this time the amount of debt reduction has yet to be determined and thus without further debt reduction we believe the company will likely maintain adjusted debt to EBITDA between 6x and 7x in 2010. If the company uses a significant portion of the proceeds for debt reduction and if we expect the company will maintain leverage at lower levels following the IPO, we would view this deleveraging action positively.
The company had approximately $930 million of outstanding debt on April 3, 2010. In our view, residential construction activity should continue to recover over the next several quarters, leading to an improvement in Ply Gem's operating performance and overall financial profile. Our rating and outlook reflect our expectations that Ply Gem's credit measures will continue to improve with interest coverage being maintained above 1x over the next several quarters.
This unsolicited rating(s) was initiated by Standard & Poor's. It may be based solely on publicly available information and may or may not involve the participation of the issuer's management. Standard & Poor's has used information from sources believed to be reliable, but does not guarantee the accuracy, adequacy, or completeness of any information used.