Moody’s rates Ortholite CFR, facilities B2

Moody's Investors Service said it assigned B2 ratings to O2 Partners, LLC's (doing business as Ortholite) proposed $212 million senior secured credit facilities.

The agency also assigned a B2 corporate family rating and a B3-PD probability of default rating to the company.

The outlook is stable.

Ortholite intends to use proceeds from the proposed term loan to refinance existing debt and fund a dividend to shareholders of its parent company, BP Ortholite LLC, and pay fees and expenses.

Moody’s said the B2 corporate family rating reflects small revenue scale, narrow product focus on high-performance footwear insoles and high concentration of sales with a few sizeable branded footwear companies.

The rating also considers the inherent risks of being owned by a private equity sponsor, specifically as it relates to the potential for shareholder-friendly financial policies.

At around 4 times, Moody’s said Ortholite's pro forma lease-adjusted debt/EBITDAR will be moderate following the proposed debt-financed dividend, although debt is higher than the company's trailing-12-month revenue. Interest coverage will exceed 3 times.

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