Moody’s rates Denali Water, facility B3

Moody’s Investors Service said it assigned first-time ratings to Dispatch Acquisition Holdings, LLC (Denali Water Solutions LLC), including a B3 corporate family rating, a B3-PD probability of default rating and a B3 rating on the company’s planned senior secured first-lien bank credit facility, consisting of a revolving credit facility and term loan.

Denali’s plan to issue a $395 million seven-year term loan, which, along with sponsor equity, will be used to refinance $244 million of its debt and fund Organix Recyling LLC’s acquisition. In connection with the transaction, Denali will issue a $60 million five-year revolving credit facility, which will be undrawn upon the transaction’s close.

“The ratings reflect Denali’s modest scale in a fragmented industry, its primary niche market focus on organic waste disposal and recycling, elevated financial leverage with debt-to-EBITDA well above 6x pro forma (all ratios including Moody’s standard adjustments), and Moody’s expectations for aggressive acquisitions over time to meaningfully build scale,” the agency said in a press release.

The outlook is stable, reflecting expectations of relatively steady waste streams to support demand for Denali’s services, the agency said.

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