Moody’s rates Universal Services loans B2, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Usagm Holdco LLC.

At the same time, the agency assigned a B2 rating to the company's proposed senior secured credit facilities consisting of a $710 million first-lien term loan due 2022, a $130 million first-lien revolving credit facility due 2020, and up to $50 million delayed-draw first-lien term loan due 2022.

In addition, Moody's assigned a Caa2 to the company's proposed second-lien credit facility consisting of a $300 million term loan and up to $20 million delayed-draw term loan, both due 2023.

The outlook is stable.

Proceeds from the proposed credit facilities, together with equity from the sponsor (Warburg Pincus LLC), management, and rollover equity from minority partners, are expected to be used to acquire Universal Group Holdings, LLC and Guardsmark, LLC. The combined entity will do business as Universal Services of America.

"The acquisition of Guardsmark should solidify Universal's market position, but high leverage combined with the challenges of integrating a sizeable acquisition is an important constraint on Universal's ratings," Moody's analyst David Berge said in a news release.

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