Moody's assigns Bayou Intermediate B2

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Bayou Intermediate II, LLC, the parent entity of Cordis. The agency also assigned B2 ratings to the company's senior secured revolving credit facility and term loan.

“The B2 corporate family rating is constrained by the risks and complexities associated with the pending carve-out of Cordis from Cardinal Health. There is uncertainty as to the ultimate cost structure of the stand-alone company as well as the costs and time that it will take to achieve full independence from Cardinal. Time or cost overruns could result in higher leverage or weaker cash flow than currently contemplated in the rating. The rating is further constrained by Cordis' high financial leverage with pro forma debt to EBITDA of 6.4 times excluding synergies as of Dec. 31, 2020,” Moody’s said in a press release.

Proceeds will be used, along with equity, to finance the $988 million acquisition of Cordis by private equity firm Hellman & Friedman LLC.

The outlook is stable, reflecting the view the carve-out will proceed smoothly without major disruptions to cash flow or customers, Moody’s said.

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