Moody's rates CPM loans B2, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to CPM Holdings, Inc.

Moody's also said it assigned a B2 rating to the senior secured first-lien bank credit facilities and a Caa2 to the second-lien term loan.

The outlook is stable.

The new loans are being issued as a part of a transaction whereby American Securities LLC is acquiring CPM in a transaction valued at about $1.2 billion from Gilbert Global Equity Partners, Moody's said.

In addition to a $515 million senior secured first-lien term loan and a $225 million second-lien term loan, American Securities will also be financing the transaction with $490 million of equity, the agency said.

The transaction is expected to close in the fourth quarter, Moody's said.

The ratings are constrained by the elevated financial risk associated with the meaningful increase in leverage following the purchase by American Securities, the agency said.

Pro forma for the acquisition, Moody's said its lease adjusted debt-to-EBITDA ratio is 6.7x for the 12 months that ended June 30.

CPM's credit profile benefits from its healthy EBITA margins of more than 18% and ability to generate healthy free cash flow given its low capital spending requirements of its light manufacturing and assembly focus, the agency said.

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