Moody's rates Westway loans Ba3

Moody's Investors Service said it assigned a Ba3 rating to the $300 million senior secured credit facilities to be issued by Westway Group, LLC. The facilities are a $270 million seven-year senior secured term loan B due 2020 and a $30 million five-year revolving credit facility due 2018. The outlook is stable.

Westway is owned by an affiliate of EQT Infrastructure II. EQT Infrastructure completed the acquisition of Westway on Feb. 1 using 100% sponsor equity via a tender offer. The term loan proceeds will be used to reimburse the sponsor for a portion of its equity, fund a capex reserve of $35 million and to pay transaction costs. The revolver will be used for general corporate purposes and to fund a six-month debt service reserve letter of credit.

The agency said the Ba3 rating considers the following strengths: revenues are supported by contracts on a take-or-pay basis with fixed-rate capacity charges; Westway has no direct commodity risk; Westway's established strategic locations combined with supporting infrastructure provide barriers to entry; it has long tenured relationships with many of its customers; the company has product and contract diversity; it has low business and operating risk profile; the management team is strong and well experienced; and existing tanks can easily be converted to support other products should it be necessary.

Moody's said the rating also reflects the following areas of credit concern: refinancing risk at Westway; managing growth; there is a lag in the receipt of the cash flows associated with the growth capital expenditures after the expenditures have been made; and contracts are not long term and will need to be renewed at differing intervals.

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