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

Vogue, 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 plans to use proceeds from the loan to pay a dividend to its shareholders. Moody’s Investors Service said it viewed the loan as a “credit negative,” and considered it evidence of “increasingly aggressive financial policies” at the company. The add-on loan, which Vogue had pulled in December due to market conditions, would boost the company’s debt-to-EBITDA multiple to about 4.6x from 3x, 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, and its main brand, Organix, includes shampoo, conditioners and body washes. The company also has a line of hair styling brands.

The company produced less than $300 million revenue for the year ended September 2014, Moody’s said. Todd Christopher, Vogue’s founder, owns 51 percent of the company while Carlyle holds the remaining 49 percent, Moody’s said.

Carlyle agreed to buy its minority stake in Vogue in January 2014. Financial terms weren’t announced. Vogue was up for sale in 2013 and was valued at $800 million or more, Reuters news service 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, which closed at $13 billion in 2013. 

Executives for Vogue couldn’t be reached for comment.