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Vogue to pay dividend to Carlyle; Moody’s calls move “aggressive”

A year after investing in Vogue International, the Carlyle Group is getting paid.

Vogue International, which is known for its Organix hair care products, is in the market with a $205 million term loan that is led by Goldman Sachs and Bank of America Merrill Lynch, according to Thomson Reuters Loan Pricing Corp.

Vogue is using proceeds from the loan to pay a dividend to its shareholders. Moody’s Investors Service said it viewed the loan as a “credit negative” while the dividend is evidence of “increasingly aggressive financial policies” at the company. The add-on loan, which Vogue had pulled in December due to market conditions, will boost the company’s debt-to-EBITDA to about 4.6 times from 3 times, the ratings agency said in a Feb. 20 note.

“Vogue’s outstanding performance has exceeded our expectations in every respect,” said Chris Ullman, a Carlyle spokesman. “The company’s capital structure is prudent and its leverage levels are well below typical LBOs in today’s market.”

Clearwater, Florida-based Vogue develops, makes, distributes and sells hair care products to consumers. The company’s main brand is Organix (OGX), which offers shampoo, conditioners and body washes. The company also has a line of hair styling brands. Vogue produced less than $300 million revenue for the year ended September 2014, Moody’s said. Todd Christopher, Vogue’s founder, owns 51 percent of Vogue while Carlyle has 49 percent, Moody’s said.

In January 2014, Carlyle agreed to buy a minority stake in Vogue. Financial terms weren’t announced. Vogue was up for sale in 2013 and was valued at $800 million or more, Reuters said at the time.

Carlyle, on its website, said it closed its minority investment in Vogue in February 2014.

The investment in Vogue came from Carlyle’s last U.S. buyout fund. Carlyle Partners VI closed at $13 billion in 2013. A very young pool, Carlyle Fund VI is producing a negative 43.3 percent net IRR and 0.9x investment multiple as of June 30, performance data from the California Public Employees’ Retirement System said.

Executives for Vogue couldn’t be reached for comment.

Photo courtesy of Vogue International