Moody's rates ServiceMaster loan B3

Moody's Investors Service said it assigned a B3 rating (LGD5, 73%) to the $1.15 billion senior unsecured interim term loan (bridge facility) of the ServiceMaster Co.

Moody's downgraded to Caa1 (LGD6, 95%) from Baa3 $585 million of senior notes with maturities ranging from 2007 to 2038 because the notes were not redeemed at the time of the closing.

The agency affirmed the B2 corporate family and probability-of-default ratings and B1 (LGD3, 34%) rated $3.3 billion senior secured credit facility.

These rating actions conclude a review for possible downgrade that began on March 19 following the announcement that the company agreed to be acquired by an investment group led by Clayton, Dubilier & Rice, Inc.

The outlook is stable.

Proceeds helped finance the leveraged buyout of ServiceMaster that closed on July 24.

The ratings are supported by leading market positions and brands in large end-markets, favorable geographic and service line diversification and stable financial performance, Moody's said.

The B2 corporate family rating is constrained by weak credit metrics pro forma for the buyout, significant competition from local, regional and national competitors and potential earnings cyclicality, the agency said.

The Caa1 downgrade reflects a lack of subsidiary guarantees which effectively subordinates such notes to the bridge facility, Moody's said.

The stable outlook anticipates moderate organic revenue growth and EBITDA improvement over the next 12-18 months, along with weak cash flow, leverage and interest coverage, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.