Moody's rates ARC loan B1

Moody's Investors Service said it assigned a B1 corporate family rating, a B1-PD probability of default rating and an SGL-2 speculative grade liquidity rating to ARC Document Solutions, Inc. and a B1 (LGD4, 53%) rating to its proposed $205 million senior secured term loan B. The outlook is stable.

The company plans to use the proceeds from the new term loan to refinance existing debt.

The agency said the B1 corporate family rating reflects ARC's moderately high financial leverage (about 4.3 times), especially in the context of the company's large exposure to the highly cyclical non-residential construction industry, sizable regional concentration in California and the highly competitive operating environment across all of ARC's product and service categories.

The rating is supported by ARC's leading position as a provider of document management services to the architectural, engineering and construction industry, its low customer revenue concentration and Moody's projections of good levels of free cash flow relative to debt, the agency said.

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