Moody’s rates Copeland B1, loan Ba3

Moody’s Investors Service said it assigned first-time ratings to Emerald Debt Merger Sub LLC (Copeland), including a B1 corporate family rating, a B1-PD probability of default rating and a Ba3 rating to the company's planned senior secured first-lien term loan B. The outlook is stable.

Copeland also plans to secure an unrated $700 million asset-based lending revolver that is expected to be undrawn at close, Moody’s said.

The loan, expected to be up to $2.75 billion, will be used by Blackstone to help fund the purchase of a 55% stake in Emerson Electric Co.’s climate technologies business. The new joint venture will be called Copeland.

“The B1 CFR reflects Copeland's high financial leverage as a result of the acquisition of a 55% stake by Blackstone. Pro forma adjusted debt/EBITDA approximates 6.7x as of Dec. 31, 2022, including $2.25 billion of PIK seller note financing. Moody's expects that debt/EBITDA will improve to around 5.5x by the end of 2025. Moody's expects this improvement to emanate from both voluntary debt repayment and EBITDA growth,” the agency said in a press release.

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