Moody's rates Wand NewCo loans B1, Caa1

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Wand NewCo 3, Inc.

Moody's also said it assigned a B1 rating to the company's proposed $300 million first-lien revolver facility and proposed $1.85 billion first-lien term loan, along with a Caa1 rating to the proposed $600 million second-lien term loan.

The outlook is stable.

The proceeds from the proposed debt issuance, along with new equity to be issued, will be used to fund the merger between CH Hold Corp. and Wand Intermediate I LP, Moody's said.

The proceeds will also be used to refinance both companies' existing debt and to pay related fees and expenses, the agency said.

The proposed merger makes strategic sense as it combines the No. 1 and No. 3 companies in the highly fragmented auto collision space, Moody's said.

Assuming the merger is completed as proposed, the new entity will have unmatched scale and geographic coverage with more than 1,000 locations, the agency said.

There are inherent risks in any combination of this sort, but Moody's noted that both companies have a strong history of executing and integrating acquisitions.

The stable outlook reflects Moody's expectations that Wand NewCo will successfully integrate the proposed merger and execute its footprint expansion strategy, resulting in meaningful EBITDA growth over the next 12-24 months. Pro forma credit metrics are estimated to improve over the period with leverage declining below 6.5 times and interest coverage as measured by EBITA/interest approaching 1.5 times.

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