Moody's revises Koosharem outlook to positive

Moody's Investors Service said it revised the outlook of Koosharem LLC, which does business as "Select Staffing," to positive from stable and affirmed its corporate family rating at B3, probability of default rating at B3-PD and senior secured term loan due 2020 at B3 (LGD4).

On Jan. 5, Select announced it plans to acquire and merge with Employbridge Holding Co. for about $410 million. The term loan will be increased by $255 million to about $624 million. All other terms will remain unchanged. The new loan proceeds and about $190 million from an equity rights offering underwritten by some existing owners including affiliates of Anchorage Capital Group, LLC and Blue Mountain Capital will be used to acquire EmployBridge.

"Bigger is better in temporary staffing, but merger integration risks, the lingering effects of the 2014 bankruptcy filing on the business, lack of recent audited financial statements and high leverage for a cyclical industry drive the low B rating," Edmond DeForest, a Moody's senior credit officer, said in an agency news release.

The positive outlook reflects Moody's expectations for 2% to 4% revenue growth, 3% operating profit margins by the end of 2015 and $60 million of free cash flow (before non-recurring uses).

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