Moody’s rates Milk Specialties CFR, facility B2

Moody's Investors Service said it assigned ASP MSG Acquisition Co., Inc. (doing business as Milk Specialties Co.) a corporate family rating and probability of default rating of B2 and B2-PD, respectively.

At the same time, the agency assigned a B2 rating to the company's newly proposed $525 million first-lien credit facility. The proposed facility consists of a $50 million five-year revolving credit facility and $475 million seven-year term loan.

The outlook is stable.

Moody's expects the borrowing entity ASP MSG Acquisition to assign its obligations to Milk Specialties upon consummation of the acquisition.

Milk Specialties signed a definitive agreement in July to be acquired by American Securities for about $830 million. Proceeds from the proposed transaction, together with a management rollover investment of its equity and new equity provided by the American Securities, will be used to fund the acquisition and pay roughly $32 million to fund an estimated original issue discount (OID) and fees and expenses associated with the transaction.

Ratings for the currently rated entity, Milk Specialties Co. (Old), will be withdrawn upon the close of this transaction.

"The levering up of Milk Specialties' balance sheet as a result of the LBO of the company materially weakens its credit metrics, but the B2 rating acknowledges the company's solid position in the niche whey processing industry, as well as the expectation the company will deleverage with free cash flow over the next few years," Moody's assistant vice president, analyst Brian Silver said in a news release.

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