Moody’s rates ATS loans B1, Caa1

Moody's Investors Service said it affirmed ATS Consolidated, Inc.'s (American Traffic Solutions) corporate family rating of B2 and probability of default rating of B2-PD.

Concurrently, the agency assigned a B1 to the proposed $840 million senior secured first-lien term loan and a Caa1 to the proposed $200 million senior secured second-lien term loan.

The outlook is stable.

ATS is refinancing its existing debt in conjunction with its acquisition of Highway Tolling Administration (HTA) for $525 million. The seller will have a 5% ownership stake in the combined company.

“The affirmation of the B2 reflects that the acquisition of HTA increases ATS' scale and market position in tolling solutions for car rental companies,” Moody’s said in a news release.

Pro forma for the acquisition, Moody’s said the company’s debt/EBITDA (including standard adjustments) increases to 5.9 times from 4.8 times (based on estimated 2017 data).

The affirmation also reflects that Moody's anticipates leverage to decline over the next 12 to 18 months toward the mid-5 times area, mainly driven by EBITDA growth.

The transaction is expected to close by the end of February.

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