Moody’s rates Agro loans B3, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Agro Merchants Intermediate Holdings, LP.

Concurrently, the agency assigned B3 ratings to the company's proposed $350 million first-lien senior secured term loan and a Caa2 rating to its $90 million second-lien senior secured term loan.

Proceeds, along with a sponsor equity contribution, will be used to refinance existing debt and to fund an acquisition.

The outlook is stable.

Moody’s said the B3 corporate family rating balances a weak set of credit metrics and high financial leverage against Agro's growing scale and footprint as a provider of cold storage services.

“Moody's anticipates that Agro will maintain a highly leveraged balance sheet with pro forma Debt-to-EBITDA of almost 8x (after Moody's standard adjustments), leverage levels that limit financial flexibility and that are weakly positioned for the rating,” the agency said in a news release.

“The rating considers Agro's aggressive roll-up strategy involving multiple acquisitions as well as the company's limited operating track record in its current form (pro forma sales of around $520 million compare to sales of just $120 million as recently as 2014).”

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