Moody's rates Diversitech loans B2

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Icebox Merger Sub, Inc., which does business as Diversitech.

The agency also said it assigned a B2 rating on the company's proposed $375 million first-lien credit facilities consisting of a $50 million revolving credit facility and $325 million term loan, along with a Caa2 rating on its $120 million proposed second-lien term loan.

The outlook is stable.

The proceeds from the proposed $325 million first-lien term loan due 2024 and $120 million second-lien term loan due 2025, along with an equity contribution, will fund the acquisition of Diversitech by a company controlled by Permira Funds, Moody's explained.

The proposed $50 million revolving credit facility is anticipated to have $5 million drawn at the close of the acquisition, the agency said.

At the close of the acquisition, Icebox Merger will be merged into Diversitech, which will become the borrower under the proposed first-lien credit facility and second-lien credit facility, Moody's said.

The ratings reflect Diversitech's very high adjusted pro forma initial debt leverage of 7.4x at the close of the transaction and aggressive growth strategy primarily based on growing the top line via acquisitions, the agency said.

Diversitech's debt leverage is expected to decline gradually through EBITDA growth, Moody's noted.

For 2017, the debt-to-EBITDA ratio will be slightly less than 7x, the agency said.

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