Moody’s rates Gruden CFR B2; loans B1, Caa1

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Gruden Acquisition, Inc., the parent of a new entity that will be formed as a result of the proposed acquisition by Apax Partners of Quality Distribution, Inc., the parent company of Quality Distribution, LLC.

Concurrently, the agency assigned a B1 rating to the company's proposed $400 million first-lien term loan and a Caa1 to its $135 million second-lien term loan.

The outlook is stable.

Proceeds from the transaction, together with a $319 million equity contribution from Apax Partners and its affiliates, will be used to finance the acquisition of Quality Distribution for about $800 million, including the assumption of debt, or $16 per share in cash. Proceeds will also be used to pay transaction fees and expenses and fund balance sheet cash. As part of the transaction, the company is putting in place a five-year (unrated) $100 million ABL revolver, undrawn at transaction close.

All pre-existing ratings at Quality Distribution, LLC, including the B2 corporate family rating, remain under review for downgrade. The review was initiated on May 8 following the acquisition announcement.

Moody's expects to withdraw all ratings at Quality Distribution upon closing of the transaction.

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