Moody’s reviews Sensus, rates loans B2

Moody's Investors Service said it assigned a B2 rating to Sensus USA Inc.'s proposed $75 million senior secured first-lien revolving credit facility and $625 million senior secured first-lien term loan.

Proceeds will be used to repay in full the company's existing first- and second-lien outstandings.

At the same time, the agency placed the B3 corporate family rating and B3-PD probability of default rating under review for upgrade. This review follows the company's announced plans to extend the maturity profile of its capital structure via the new proposed facility, thereby also addressing the near-term expiry of its secured revolving credit. This action also follows Moody’s expectations that the company's core revenues and profitability (excludes benefits from a FY 2015 U.K. non-recurring contract) are expected to continue to moderately improve in the 2016/2017 time frame.

Sensus' existing debt instrument ratings, including its B2 first-lien bank debt and Caa2 second-lien bank debt, remain unchanged and will be withdrawn upon closing of the proposed refinancing.

The outlook was changed to under review for upgrade from positive.

As part of the refinancing transaction, Sensus plans on putting in place a new $700 million senior secured bank financing comprised of a $75 million senior secured first-lien revolving credit facility due 2021 (undrawn at close) and $625 million senior secured first-lien term loan due 2023. These facilities will replace Sensus' existing $100 million revolver due May 2016 and repay the roughly $453 million outstanding first-lien term loan due May 2017 and $150 million second-lien term loan due May 2018.

This would eliminate the junior capital in the company's existing capital structure, resulting in an all first-lien debt structure. The refinancing would be largely leverage neutral.

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