Moody’s rates Cole-Parmer loans B2 & Caa2

Moody's Investors Service and it assigned B3 corporate family and B3-PD probability of default ratings to CPI Buyer, LLC, the holding company for Cole-Parmer Instrument Co., which private equity firm GTCR LLC is purchasing from Thermo Fisher Scientific, Inc.

The agency also assigned B2 ratings to the proposed $20 million revolving credit facility and $240 million term loan, both first-lien, and a Caa2 rating to the $107 million second-lien term loan.

The outlook is stable.

Moody’s said the B3 corporate family rating reflects its expectation for sustained high leverage (over 6 times) as free cash flow and incremental debt are used to grow the business following GTCR's purchase.

The rating also reflects the uncertain cost structure of the standalone business as well as the potential competitive pressures against the company's third party distribution revenue, particularly due to the company's modest scale.

Moody's expects the sales of proprietary products, lead by the Masterflex line of peristaltic pumps and tubing, will provide revenue stability and solid margins. The agency also expects sales of laboratory equipment and consumables to generate slow revenue growth, steady margins, mid single digit percent free cash flow to adjusted debt fueled by low capex requirements.

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