DBRS Assigns Rating of BB with a Stable Trend to Reliance Intermediate’s New Issue

DBRS Limited (DBRS) has assigned a rating of BB with a Stable trend to Reliance Intermediate Holdings LP’s (Reliance or the Company) issuance of USD 375 million Senior Secured Notes (the Notes) due April 1, 2023. The Notes settled on March 24, 2015.

The Notes will rank equal in right of payment with all of Reliance’s existing and future senior indebtedness. The proceeds from the issuance of the Notes will be used to fund the purchase of any and all of the Company’s outstanding 9.50% Senior Notes due 2019 in a tender offer and to pay certain related fees and expenses.

Notes:
All figures are in U.S. dollars unless otherwise noted.

DBRS’s ratings on Reliance LP and Reliance Intermediate Holdings LP (collectively the Companies) are based on the DBRS methodology Rating Companies in the Consumer Products Industry (October 2014) and Rating Holding Companies and Their Subsidiaries (January 2015). However, DBRS views the Companies’ strong franchise as having a superior business risk profile than that of a traditional consumer products company. As a result, the Companies are able to manage higher leverage metrics.

Overall, in its assessment of the credit quality of the Companies, DBRS factors in the following key items: (1) competition arising from regulatory changes, (2) effects of attrition on customer base, (3) stability of cash flow generated from customer base, (4) flexibility to increase rental rates, (5) limited operational risk through a co-ownership agreement and (6) dependency on new home developments for growth.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

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