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Moody’s rates GCA B2; loans B1, Caa1
Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Erie Acquisition Holdings, Inc. (initially GCA Merger Sub, Inc.) following the announcement of its leveraged buyout.
GCA Merger Sub is an acquisition vehicle that will be merged with and into Erie Acquisition upon closings of the transaction, with Erie Acquisitions being the surviving entity and obligor under the new capital structure.
At the same time, the agency assigned B1 ratings to the company's proposed first-lien credit facilities, including a $515 million first-lien senior secured term loan and a $100 million revolving credit facility.
Moody's also assigned a Caa1 rating the company's proposed $160 million senior secured second-lien term loan.
The outlook is stable.
Proceeds from the proposed senior secured term loans, along with a contribution of common equity, will fund the leveraged buyout of the company by affiliates of Thomas H. Lee Partners LP and Goldman Sachs & Co., refinance existing debt and pay transaction fees and expenses. Both sponsors will retain equal ownership and controlling interest in the new company.
"The B2 corporate family rating reflects the high financial leverage resulting from the sizable amount of debt that will be used to fund the leveraged buyout of the company," Moody's analyst Oleg Markin said in a news release.
"However the company's credit profile benefits from its strong market position in the K-12 education market and favorable business fundamentals for outsourcing custodial and related services at a time when school districts as well as the company's commercial clients look to streamline costs."
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