Moody's rates Owens & Minor loan Ba3

Moody's Investors Service said it rated Owens & Minor Inc.’s planned $1.2 billion first-lien term loan Ba3 and downgraded its senior secured rating to Ba3 from Ba2 as well as its senior unsecured rating to B2 from B1. The agency also revised the outlook to stable from under review and affirmed the Ba3 corporate family and Ba3-PD probability of default ratings. There is no change to the speculative grade liquidity rating of SGL-1.

These actions conclude the review started on Jan. 12, following the announcement that Owens & Minor will acquire Apria, Inc. in a transaction with a total enterprise value of about $1.45 billion. The acquisition is expected to close by the end of June 2022.

As part of the deal, Owens & Minor plans to raise $1.7 billion of new debt consisting of a $1.2 billion senior loan and $500 million of other funded debt that Moody's expects to be ranked senior unsecured.

“The one notch instrument ratings downgrades reflect the increase in the amount of debt within the capital structure. The outlook is stable. Moody's expects that Owens & Minor's financial leverage will improve towards 3x within 12-18 month of the completion of the Apria acquisition,” the agency said in a press release.

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