Moody's rates Eagle Parent, loans B2

Moody’s Investors Service said it assigned ratings to Eagle Parent Corp. (Restaurant Technologies Inc.), including a B2 corporate family rating, a B2-PD probability of default rating and a B2 rating to each of the company's planned first-lien credit facilities, consisting of a $100 million five-year revolver and a $810 million seven-year term loan B.

"The B2 CFR reflects Restaurant Technologies’ relatively moderate revenue, high financial leverage in connection with the LBO, and our expectation for limited free cash flow generation over the next 12-18 months amid the company's substantial upfront capital expenditures related to new customer installations," said Dawei Ma, a Moody's analyst, in a press release.

"Nevertheless, we recognize the company as a leading service provider in closed-loop oil management, the stability of its contractual and recurring revenues, and the safety, quality, and efficiency benefits that Restaurant Technologies’ products and services provide to its customers. We also expect the company has the ability to offset potentially lower used cooking oil (UCO) prices by increasing other services fees or reducing its cost of services including lower oil delivery costs to maintain an EBITDA margin in the low teens. We expect the company’s financial leverage to decline to below 7x debt to EBITDA by 2022, supported by revenue and profitability growth through new customer additions based on signed contracts, increasing existing customer penetration, and a favorable UCO market,” Ma added.

Term loan proceeds and equity from ECP along with other co-investors will be used to buy the company and pay transaction-related fees and expenses. The ratings assigned to Restaurant Technologies, Inc. including the company’s B2 CFR and stable outlook are not affected and will be withdrawn upon repayment of its debt, the agency said.

The outlook is stable.

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