Moody’s cuts AVSC, rates facilities

Moody's Investors Service said it downgraded AVSC Holding Corp.'s (PSAV) corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

At the same time, the agency assigned a B2 rating to the company's proposed $1.1 billion first-lien senior secured credit facility (including the proposed $100 million revolver due 2023 and $1.03 billion first-lien term loan due 2025), as well as a Caa2 rating to the proposed $285 million second-lien senior secured term loan due 2025.

The outlook is stable.

The company intends to use the net proceeds to refinance its existing debt, fund a sizable dividend of roughly $317 million to its financial sponsors, and pay associated fees and expenses.

AVSC will enter into a new $100 million revolving credit facility, which will have moderate borrowings at close.

The B2 ratings of AVSC’s existing first-lien credit facilities are unaffected at this time but will be withdrawn upon repayment in conjunction with the refinancing.

“The downgrade to B3 CFR reflects PSAV's aggressive financial policies and weakened credit profile following a third dividend transaction since being acquired by Broad Street Principal Investments and Olympus Partners in 2014,” Moody’s said in a news release.

“The proposed transaction will raise leverage by approximately 1.5 turns to 6.3 times from 4.8 times based on December 31, 2017 debt-to-EBITDA (Moody's adjusted and incorporating full year earnings contribution from the recent acquisitions).”

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