Bass Pro Group is proposing to offer a $4.1 billion senior secured term loan due 2028. The retailer intends to refinance its existing term loan facility in a one-for-one transaction to extend the maturity of the facility and to lower overall interest costs.

News of the offering came from a press release from S&P Global Ratings.

S&P assigned a ‘B+’ issue-level and ‘3’ recovery ratings to the senior secured term loan offering. The ‘3’ recovery rating indicates S&P’s expectation for meaningful recovery to lenders (50 percent-to-70 percent; rounded estimate, 55 percent) in the event of default.

S&P wrote, “Along with the term loan transaction, Bass Pro (B+/Stable/–) intends to refinance its undrawn asset-backed lending facility (not rated), extending the maturity to 2026 and increasing overall availability by $300 million, to more than $1.5 billion. The increase in the priority debt in the capital structure results in a 55 percent rounded estimated recovery on the term loan facility, down from a 60 percent rounded estimate in prior analyses. In our simulated default scenario, we still assume Bass Pro would experience lower consumer discretionary spending in a volatile economy and that increased competition would hurt operating performance.

“Our ‘B+’ issuer credit rating on Bass Pro reflects its leading market position in the highly competitive sporting goods and outdoor recreation market. The company’s profitability has historically benefited from its good penetration of private-label brands and its fast-growing, vertically integrated recreational boat and adjacent businesses. We view Bass Pro’s large destination store format, compelling in-store experiences, and recently enhanced e-commerce platform as positive business aspects. We think these dynamics will help sustain credit metrics, including projected adjusted leverage in the low-5x area in fiscal year 2021. Our projections do not directly incorporate the announced acquisition of Sportsman’s Warehouse (not rated). That said, we believe Bass Pro will fund the purchase with balance sheet cash. We expect the acquisition, when it closes later this year, will be largely leverage neutral to modestly deleveraging on an S&P Global Ratings-adjusted basis.”

Photo courtesy Bass Pro