Moody’s affirms STS Operating

Moody's Investors Service said it affirmed the B2 corporate family rating and B2-PD probability of default rating of STS Operating, Inc.

The agency also affirmed the B2 rating on SunSource's senior secured first-lien term loan due 2024, taking into account the $295 million planned upsize of the loan.

Concurrently, Moody's affirmed the Caa1 rating on SunSource's senior secured second-lien term loan due 2026.

The outlook remains negative.

Proceeds of the incremental first-lien, along with a new unsecured $37.5 million paid-in-kind loan due 2021 as well as sponsor equity and $7 million in cash, will be used primarily to fund the acquisition of United Distribution Group, Inc.

SunSource also plans to increase commitments for its unrated asset-based lending revolver to $150 million from $75 million as part of the transaction.

The agency said the affirmation reflects an expectation that favorable fundamentals in a majority of the company's industrial markets will remain supportive of its positive earnings momentum into 2019 and help reduce leverage over the next year.

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