Moody's affirms OMNIA on upsizing

Moody's Investors Service said it affirmed the B3 corporate family rating and B3-PD probability of default rating on National Intergovernmental Purchasing Alliance Co.'s (NIPA), a wholly owned subsidiary of OMNIA Partners, Inc.

Moody's also said it affirmed the upsized B2 senior secured first-lien bank credit facilities ratings, as well as the upsized Caa2 senior secured second-lien term loan.

The outlook remains stable.

The proceeds from the upsized first- and second-lien term loans, as well as balance sheet cash will be used to fund a $225 million dividend to its private equity owners and other shareholders, and pay transaction-related fees, Moody's said.

While the shareholder dividend increases its debt-to-EBITDA to about 7.x from 6.1 times, the ratings were affirmed due to an expectation of meaningful de-leveraging that will come primarily through EBITDA growth, the agency said.

Moody's said it views the dividend recapitalization as aggressive, resulting in high financial leverage.

The agency also said it expects OMNIA Partners to benefit from solid organic growth, strong profit margins, as well as from a recent sizable contract win by the company over the next 12- to 18-months.

The ratings reflect OMNIA's aggressive financial policy, as well as the company's high pro forma leverage, Moody's said.

The ratings are constrained by OMNIA's small absolute size based on its revenue and EBITDA, limited track record as a stand-alone operator and the company's narrow focus on providing procurement efficiencies to its members in the public and private sectors, the agency said.

The company's ratings are supported by the favorable market trends within the public and private sector group purchasing organization (GPO) market, as well as expected growth associated with a recently won contract, Moody's said.

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