Moody's rates Knowledge Universe loans

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to KC Mergersub, Inc. (Knowledge Universe Education LLC), B1 (LGD3) ratings to the company's proposed first-lien senior secured credit facilities, consisting of $645 million term loan due 2022 and $80 million revolving credit facility due 2020, and a Caa1 (LGD5) rating to its proposed $200 million second-lien senior secured term loan due 2023. The outlook is stable.

Knowledge Universe agreed to be acquired by Partners Group. The acquisition will be funded with the proceeds of the proposed first-lien and second-lien term loans and equity contributions from the sponsor and the management.

The agency said the B3 corporate family rating reflects Knowledge Universe's thin operating margins and modest free cash flow generation, the volatile and cyclical nature of the child-care and education industry and the substantial increase in debt associated with the purchase of the company by Partners Group. Total debt will increase to $845 million from $295 million, resulting in pro forma debt to revenues of 56% and pro forma debt-to-EBITDA of approximately 5.1x (inclusive of Moody's standard adjustment for operating leases).

The rating is supported by the company's large scale within the child-care and education industry, its broad geographical diversity within the United States and the value of its brands, Moody’s said.

© 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.