Moody's rates Gavilon loan Ba1

Moody's Investors Service said it assigned Ba3 corporate family and probability-of-default ratings to Gavilon Group, LLC and a Ba1 (LGD2, 25%) rating to its $1.75 billion secured asset-based lending facility due 2014.

The outlook is stable.

A group of investors led by Ospraie Special Opportunities Fund will use a portion of the asset-based lending facility along with a $550 million seller note and $1.72 billion of cash equity to fund the $2.6 billion acquisition of ConAgra Foods Inc.'s trading and merchandizing operations, which will be renamed Gavilon Group, LLC.

The agency said the Ba3 corporate family rating reflects the company's modest scale relative to other rated global companies in the merchandizing and distribution of agricultural commodities, the size of its trading and distribution operations for non-agricultural products, lack of meaningful vertical forward integration, expected elevated leverage and the lack of trading history as an independent company owned by a financial firm.

However, Moody's believes these negatives are offset by the relatively large equity contribution from the sponsors, unusually strong credit metrics over the past year, an experienced management team, a detailed risk management approach and incentive compensation for traders that is aligned with the company's risk management objectives.

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