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Moody’s rates VF Holding facilities B2, Caa2
Moody's Investors Service said it affirmed VF Holding Corp.'s (Vertafore Inc.) B3 corporate family rating and B3-PD probability of default rating following the announcement of a dividend recapitalization transaction.
Concurrently, the agency assigned B2 ratings to the company's proposed $100 million senior secured first-lien revolving credit facility and $1.6 billion senior secured first-lien term loan.
Moody's also assigned a Caa2 rating to Vertafore's proposed $665 million senior secured second-lien term loan.
The outlook is stable.
Net proceeds will be used to refinance existing debt, fund a large distribution to shareholders and pay transaction fees and expenses. Upon the close of the proposed transaction, Moody's would withdraw the ratings on the existing debt instruments.
"The B3 CFR reflects exceptionally high debt to EBITDA of about 10 times following the proposed dividend recap," Moody's analyst Stephen Morrison said in a news release.
"Counter-balancing this high financial risk, maintenance of the B3 rating and stable outlook strongly considers Vertafore's competitive positioning and our expectations for continued organic growth and improving free cash flow generation."
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