Carson Inc. Assigned Ratings by S&P; Outlk Stable.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 10/17/97 --Standard & Poor's today assigned its single-'B'-minus rating to Carson Inc.'s $100 million senior subordinated notes due 2007, which are being offered under a Rule 144A Rule 144A A Securities & Exchange Commission rule modifying a two-year holding period requirement on privately placed securities to permit qualified institutional buyers to trade these positions among themselves. registration. Additionally, a double-'B'-minus bank loan rating is assigned to Carson's $75 million credit facility. No immediate draws are expected under the new facility. A corporate credit rating of single-'B'-plus also was assigned. The outlook is stable. The ratings reflect Carson's leadership positions in niche subsegments of the hair care, cosmetics, and shaving products categories, offset by aggressive growth strategies and high leverage. With a tight focus on marketing to the specific needs of African-American consumers, Carson has established strong market shares in hair relaxers, hair color, and men's shaving products. Carson recently acquired the Cutex business in the United States and Puerto Rico, giving it a small entry into the nail care category with Cutex nail polish remover nail polish remover n → quitaesmalte m nail polish remover nail n → dissolvant m nail polish remover nail n . Approximately 25% of Carson's revenues are generated through export sales or through its majority-owned, publicly traded South African subsidiary. While Carson's portfolio has some diversity, the company remains very small relative to its competitors in the more broadly defined categories in which it competes. Additionally, while international sales are dollar denominated, Carson will remain exposed to foreign currency risks if it intends to maintain market presence despite unfavorable exchange rates. Although Carson raised $38 million in an initial public offering in October 1996 and applied proceeds to debt reduction, the company remains highly leveraged due to the debt-financed acquisition activity earlier this year. Excluding any annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. impact of recent acquisitions, and pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma for the new debt, debt to earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) is about 4 times (x). EBITDA to interest is about 2.5x. As Carson does not intend to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. earnings from its South African subsidiary, domestic debt coverage statistics are somewhat weaker than reported, although within ranges expected for the rating. Carson remains committed to boosting growth through acquisitions that would augment its international presence -- particularly in South Africa -- or broaden its domestic portfolio. In addition to cash balances of about $15 million and internally generated cash flow, the company's new credit arrangement includes a $50 million acquisition facility, providing significant funding capability to finance future acquisitions. Although the acquisition facility converts to a term loan within one year of closing, Carson's free cash flow should be adequate to cover required amortization payments. The $25 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. provides supplemental financial flexibility. OUTLOOK: STABLE Carson's strong brand names and solid market position should continue to generate stable cash flows. The company's intent to expand through debt-financed acquisitions, among other strategies, will likely preclude meaningful improvement in its financial profile. -- CreditWire CONTACT: Lucy Patricola, CFA (Computer Fraud and Abuse Act of 1986) Signed into law in 1986, the CFA was a significant step forward in criminalizing unauthorized access to computer systems and networks. The Act applies to "federal interest computers" that include any system used by the U.S. , New York (1) 212-208-1719 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com Today's News On The Net - Business Wire's full file on the Internet with Hyperlinks to your home page. URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. : http://www.businesswire.com |
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