Moody’s rates Veritext loans B2, Caa2

Moody's Investors Service said it assigned ratings for Green Veracity Acquisition, Inc. (Veritext Corp.), including a B3 corporate family rating and B3-PD probability of default rating.

The agency also assigned B2 ratings to the company's proposed senior secured first-lien credit facilities, consisting of a $40 million revolving credit facility expiring 2023, a $300 million term loan due 2025 and a $50 million delayed-draw term loan due 2025.

In addition, Moody's assigned a Caa2 rating to the company's proposed $105 million senior secured second-lien term loan due 2026.

Proceeds from the new term loans, along with common equity from private equity firm Leonard Green & Partners, LP, will be used to finance the acquisition of Veritext by Leonard Green & Partners in a leveraged buyout transaction.

The outlook is stable.

At the close of the transaction, Green Veracity will be merged with and into VT Topco, Inc., with VT being the surviving entity.

The agency said Veritext's corporate family rating broadly reflects its high financial risk profile, with Moody's-lease adjusted debt to EBITDA of 6.5x, or 6.9x non-lease adjusted, on a pro forma basis, and an expectation that leverage will remain high as it continues to use debt to fund acquisitions.

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