Moody's assigns Apro B2

Moody's Investors Service said it gave a B2 rating to Apro, LLC's (United Pacific) upsized term loan B, following the company's announcement that it intends to issue a $105 million add-on. The company's other ratings are unchanged, including its B2 corporate family rating, B3-PD probability of default rating or B2 senior secured bank credit facility rating.

The proposed $105 million term loan B add-on along with $45 million of cash on hand will be used to pay a $150 million dividend to its shareholders and pay fees and expenses.

“Moody's views the planned debt-financed dividend to be credit negative as it increases leverage which Moody's already considers to be high for the rating category. The transaction will increase the term loan B outstanding to $550 million and raise leverage – pro forma for a full year of recent acquisitions – to 6.8x from 6.5x, above the downgrade factor of 6.5x. The dividend comes just two years after Phillips 66 agreed to acquire its interest in Apro for a cash consideration of $260 million. Apro is owned by Phillips 66 (A3 negative), Fortress Investment Group LLC – each with 48% ownership and 50% voting interests – and others (4%),” the agency said in a press release.

The outlook remains stable.

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