Moody’s assigns Vestis, loans Ba2

Moody's Investors Service said it assigned a first-time Ba2 corporate family rating and Ba2-PD probability of default rating to Vestis Corp. Concurrently, the agency rated the company's senior secured credit facilities Ba2. The speculative grade liquidity rating is SGL-2. The outlook is stable.

The senior secured credit facilities consist of a $700 million term loan A2 due 2028, a $300 million revolving credit facility due 2028 and a newly planned $800 million term loan B due 2031. The new loan will be used to refinance the company’s $800 million term loan A due 2025.

“Vestis' Ba2 CFR reflects the company's high financial leverage, with debt to EBITDA of 4.1x for the 12 months ended Sept. 29, 2023, pro forma for the proposed financing, that Moody's expects will improve to 3.6x in the next 12 to 18 months from a combination of mid-single-digit revenue growth and debt repayment.

“The company benefits from its position as the second largest service provider in the specialized uniform rental and workplace supplies industry in the U.S., low customer concentration across diverse end markets, and recurring revenue from multi-year customer contracts,” Moody’s said in a press release.

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