Moody’s lowers Garda loans, rates add-on B1

Moody’s Investors Service said it affirmed Garda World Security Corp.’s B2 corporate family rating and B2-PD probability of default rating.

The agency also said it downgraded the ratings on the company’s senior secured revolver and term loans to B1 from Ba3 and assigned a B1 rating to the proposed $125 million add-on term loan.

Moody’s also said it affirmed the Caa1 rating on the senior unsecured notes and withdrew the speculative grade liquidity rating.

The outlook remains stable.

The proceeds from the $125 add-on first-lien term loan will be used to repay amounts outstanding under the company’s revolving credit facility, the agency said.

The agency said the transaction is leverage-neutral and the company’s adjusted debt-to-EBITDA ratio remains at about 6.6x.

The downgrades on the revolver and term loans reflect the increase in the proportion of that debt class in the capital structure, Moody’s said, such that there is less loss absorption capacity provided by unsecured debt beneath them.

The ratings also consider the company’s appetite for debt-financed acquisitions, reputational risk stemming from exposure to high-threat projects in the Middle East and Africa and low organic growth prospects in its two businesses, the agency said.

Moody’s said it expects recent acquisitions to support earnings growth through the next 12 to 18 months.

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