Moody's assigns Cubic B3

Moody's Investors Service said it assigned initial ratings to Atlas CC Acquisition Corp. (Cubic Corp.), including B3 corporate family and first-lien credit facility ratings, and a Ba3 term loan C rating. The rating outlook is stable.

First-lien bank facilities proceeds, along with $2 billion of junior debt and equity, will fund Cubic’s leveraged buyout by Veritas Capital.

“The ratings, including the B3 CFR, reflect Cubic's good backlog and promising growth potential, but leverage will be very high initially and trailing free cash generation has been modest. Moody's estimates that EBITDA leverage pro forma for the leveraged buyout will exceed 9x and not decline below 7x until early 2023. The company's $3.7 billion backlog gives revenue visibility and reflects Cubic's good innovation and contract execution record,” Moody’s said in a press release.

“The Ba3 rating on the $300 million term loan C, three notches above the CFR, stems from its first priority lien on a like amount of restricted cash. The B3 rating of the other first-lien facility tranches reflects the presence of $325 million effectively junior second-lien term loan that would absorb first loss in a stress scenario. Cubic also has $115 million of unsecured non-debt claims that would likely exist in a stress scenario,” the agency said.

The outlook is stable. Moody’s said it expects very high financial leverage near-term that will decline but only with substantial cost reduction.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.