Moody's rates Grand Circle loans B2

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to Grand Circle Holdings, LLC and a B2 rating to its second-lien credit facilities due 2014.

Grand Circle River Cruise Lines, LLC has a B2 rating (LGD 4, 52%) $145 million senior secured second-lien term loan guaranteed by Grand Circle Holdings, LLC; GC Cayman Holdings, Ltd. has a B2 rating (LGD4, 52%) $25 million senior secured second lien term loan guaranteed by Grand Circle Holdings, LLC and Grand Circle River Cruise Lines, LLC.

The outlook is stable.

Ratings are assigned with the acquisition of Grand Circle by Court Square Capital Partners for $780 million, which will be financed with $170 million first-lien credit facilities, $170 million second-lien facilities, $125 million junior subordinated secured notes, $25 million junior subordinated unsecured notes, $85 million senior preferred payment-in-kind equity, $200 million junior preferred PIK equity and $25 million common equity.

The B2 rating reflects Grand Circle's high pro-forma leverage and a growth strategy dependent upon passenger growth and higher prices in the face of a weakening economy, the agency said.

Ratings benefit from the company's strong market position, demographic trends, modest capital needs and track record of positive growth, Moody's said.

Pro forma for the acquisition, Grand Circle's adjusted debt-to-EBITDA ratio is about 6.8 times.

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