Moody’s rates SourceHOV loans B1, Caa1

Moody's Investors Service said it assigned SourceHOV, LLC (NEW) a B2 corporate family rating and a B2-PD probability of default rating.

The agency also assigned B1 ratings to SourceHOV's proposed $855 million of first-lien credit facilities comprising a $75 million revolving credit facility and a $780 million term loan, and a Caa1 rating to the proposed $250 million of second-lien term loan facility.

The company plans to use the proceeds to redeem the preferred equity interest held in SourceHOV by its existing majority shareholder, Rohatyn Group, for about $354 million, and refinance existing debt at SourceHOV and BancTec Group. SourceHOV expects to close its planned merger with BancTec for $339 million in an all-stock transaction concurrently with the proposed recapitalization.

The outlook is negative reflecting the execution risk of integrating the two companies and SourceHOV's high initial financial leverage. Moody's will withdraw the ratings for SourceHOV's existing credit facilities at the close of the transactions.

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