Moody’s reviews Prime Security, rates loans Ba2, B3

Moody's Investors Service said it assigned provisional Ba2 and provisional B3 ratings to Prime Security Services Borrower, LLC's proposed first- and second-lien credit facilities, respectively, and placed all of its ratings, including the B2 corporate family rating and B2-PD probability of default rating, on review for upgrade.

All ratings of ADT Corp., including the Ba2 corporate family rating and Ba2 senior unsecured ratings, were affirmed. The outlook for ADT is stable.

Prime Security expects to raise about $5.4 billion of new debt and preferred securities and roughly $4.5 billion of new equity to effect the $7.8 billion Apollo Security Services Borrower, LLC-backed acquisition of ADT, the alarm-monitoring industry's largest competitor, refinance a portion of ADT's existing debt, and pay related fees and expenses.

Prime Security will use proceeds from $1.6 billion of new first-lien debt and $3.1 billion of new second-lien debt, while $1.1 billion of existing P1 first-lien debt and $260 million of existing second-lien debt will remain outstanding.

Nearly $3.8 billion of existing unsecured notes at ADT will remain outstanding and will be, upon closing, secured by first-priority security in substantially all of the company's and guarantors' assets (while a smaller amount of shorter-maturing ADT notes will be retired). Supplementing the financing's sources will be a $750 million issuance of preferred securities (unrated).

Revolving credit facilities summing to $350 million are expected to remain undrawn at closing.

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