S&P Raises Receovery Rating on Douglas Dynamics (PLOW) to '3' Following Proposed Notes Upsizing

Standard & Poor's Ratings Services today lowered its issue-level rating on Douglas Dynamics' (NYSE: PLOW) senior secured term loan to 'BB-' from 'BB' and revised the recovery rating to '3' from '2'. The rating actions follow Douglas' proposed upsizing of its senior secured term loan by $80 million from the original $125 million issued. The 'BB-' corporate credit rating and stable outlook on Milwaukee-based Douglas Dynamics Inc. are unaffected.

The company plans to upsize its term loan to acquire Henderson Products Inc., a snow and ice control equipment and services provider primarily serving municipal end markets in the U.S. The term loan's maturity will also be extended to 2021 from 2018.

With the larger loan size, the projected recovery on the credit facility drops below the 70% threshold for a '2' recovery rating. The '3' recovery ratings on the term loan indicate our expectation for meaningful recovery (50% to 70%) in the event of a payment default. The 'BB-' issue-level rating on the credit facility is the same as the corporate credit rating on Douglas, which is in line with our notching guidelines for a '3' recovery rating.

Subsidiary Douglas Dynamics LLC is the borrower of the senior secured debt. For the corporate credit rating rationale, see the summary analysis on Douglas Dynamics published on Sept. 5, 2014.

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