Moody’s Investors Service placed Brunswick Corporation’s debt ratings on review for downgrade. This follows the company’s announcement today that Brunswick will spin-off its fitness business. Brunswick said that following the proposed transaction, the fitness business will be an independent, standalone, publicly-traded company. Brunswick expects the transaction to close by Q1 2019.
The Fitness business generated slightly over $1 billion of revenue in 2017. “We estimate that the Fitness business accounted for roughly 20% of Brunswick EBITDA,” said Kevin Cassidy, senior credit officer at Moody’s. Brunswick’s credit profile benefited from the diversity and general earnings stability the Fftness business provided. “The surviving Marine business, especially boat, is more exposed to swings in discretionary consumer spending,” noted Cassidy.
Moody’s rating review will focus on Brunswick’s capital structure and ongoing business profile following the spin. Moody’s review will also include stress-testing the company’s performance, given a reasonable economic downturn.
Ratings placed on review for downgrade:
Senior unsecured notes due 2021, 2023 and 2027 at Baa2