Quikrete Holdings, Inc. -- Moody's downgrades Quikrete's CFR to B1 from Ba3; rating outlook stable

New York, October 24, 2016 -- Moody's Investors Service ("Moody's") downgraded Quikrete Holdings, Inc.'s ("Quikrete") Corporate Family Rating to B1 from Ba3 and its Probability of Default Rating to B1-PD from Ba3-PD following the company's recent announcement that it is acquiring Contech Holdings, Inc. ("Contech"), a designer, manufacturer and distributor of engineered water infrastructure solutions for the domestic construction end markets, resulting in key debt credit metrics indicative of lower ratings. The downgrade also reflects Moody's views that Quikrete is pursuing more aggressive financial strategies. Moody's did not anticipate such a significantly large and transformative debt-financed acquisition so soon after Quikrete's upgrade at the end of August. In a related rating action, Moody's assigned a B1 rating to the proposed $2.2 billion senior secured term loan due 2023. Terms and conditions for the proposed term loan will be substantially similar to those for the existing term loan due 2020. Proceeds from the term loan and about $100 million of cash on hand will be used to acquire Contech, to pay off the company's existing $1.3 billion senior secured term loan due 2020, and to pay OID and related fees and expenses. The rating assigned to the $1.3 billion senior secured term loan due 2020 is being downgraded to B1 from Ba3, but this rating will be withdrawn once the term loan is paid off. The rating outlook is stable.

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