Moody’s gives U.S. Security loans B2

Moody's Investors Service said it affirmed U.S. Security Associates Holdings, Inc.'s B3 corporate family rating and B3-PD probability of default rating, and assigned B2 instrument ratings to the company's proposed $450 million senior secured first-lien term loan and $75 million senior secured first-lien revolver.

The outlook is stable.

Proceeds from the proposed transaction will be used to refinance the company's existing credit facilities, pay related costs associated with the transaction and put cash on the balance sheet.

The existing facilities include about $402 million outstanding on the term loan and $36 million across the company's two revolving credit facilities (about $5 million of outstandings under an $11 million revolver expiring in July 2016 and the remainder under a $64 million revolver expiring in April 2017).

The transaction will be essentially leverage neutral and will modestly improve the company's near-term liquidity, as it will address the upcoming maturities on U.S. Security's revolving credit facilities, Moody’s said.

However, the agency noted that the proposed term loan and revolver are expected to contain a springing maturity inside of the July 2018 maturity of the company's $160 million senior unsecured notes (unrated) if $50 million or more remains outstanding on the notes 91 days prior to maturity. As a result, the company will need to revisit its long term capital structure over the next 12 to 18 months.

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