Moody's rates Lindorff debt B1, B2, Caa1

Moody's Investors Service said it assigned a provisional B2 corporate family rating to Lock Lower Holding AS, the parent company of Lindorff AB, a provisional Caa1 rating to its proposed €450 million senior notes and provisional B2 and B1 ratings to Lock AS’ proposed €1 billion senior secured notes and proposed €225 million revolving credit facility, respectively.

These ratings are contingent upon the successful completion of the acquisition of a majority stake in Lindorff by Nordic Capital Fund VIII from Altor and Investor AB. The proceeds of the issuances will mainly be used to pay existing debt and to fund the acquisition process.

The agency said the provisional B2 corporate family rating reflects the company's solid niche market position as one of the largest debt collection agencies in Europe, strong track record as a debt purchaser and debt collection agency, established and increasing geographic diversification, relatively strong and stable cash flow generation and improving profitability metrics.

The rating is constrained by Lindorff's proposed 5.5 times leverage, which is high and leads to limited financial flexibility; modest liquidity profile due to the intensive use of its credit facilities; and lack of a defined and independent risk management function, Moody’s said, adding that the significant private equity ownership of the firm brings an element of uncertainty as regards the timing and method of exit of the investment.

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