Moody’s rates Acelity facility B1

Moody's Investors Service said it assigned a B1 rating to Acelity LP Inc.'s new senior secured credit facility, which includes $1.34 billion of first-lien term loan debt and a $300 million revolving credit facility.

The agency also withdrew the speculative grade liquidity rating of SGL-2.

All other existing ratings, including the B3 corporate family rating, B3-PD probability of default rating and existing instrument ratings, remain on review for upgrade.

Proceeds from the new senior secured credit facility and divestiture of Acelity's LifeCell business will together be used to refinance and repay existing debt, pay transaction fees and fund a $100 million special dividend. The new financing is conditioned upon Acelity completing the sale of its LifeCell business. Moody's expects Acelity's pending $2.9 billion sale of LifeCell to Allergan, Inc. (Baa3 stable) to close during the first quarter of 2017.

If the transaction is completed, the agency said it expects to upgrade the corporate family rating to B2 from B3 and probability of default rating to B2-PD from B3-PD. It also expects to downgrade the existing senior secured first-lien notes to B1 from Ba3 due to the significant loss of cushion provided by more junior debt in the new capital structure. Finally, Moody's said it anticipates that it will upgrade Acelity's existing senior secured third-lien notes to Caa1 from Caa2.

"Acelity's sale of LifeCell along with the proposed refinancing will result in a substantial deleveraging that will more than offset the loss of scale and business diversification," Moody's vice president, senior analyst Jonathan Kanarek sai din a news release.

The agency estimates that the company’s pro forma adjusted debt to EBITDA will decline to 5.6 times from 7.4 times currently.

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