Moody's assigns KKR Apple B2

Moody's Investors Service said it assigned first-time ratings to KKR Apple Bidco, LLC (Atlantic Aviation), including a B2 corporate family rating and a B2-PD probability of default rating. Concurrently, Moody's assigned B1 ratings to the company's first-lien senior secured credit facilities and a Caa1 rating to the second-lien senior secured term loan.

“The B2 CFR balances high financial leverage and heavy exposure to the cyclical general aviation market against Atlantic's strong position as the second largest fixed-base operator (FBO) within the US. Moody's expects an aggressive financial policy that will limit near-term financial flexibility and require strong execution of operations. Pro forma debt-to-EBITDA will be above 7x and free cash generation will be limited in 2021 and 2022, as the company makes significant growth-oriented capex investments,” the agency said in a press release.

Proceeds from the credit facilities, along with sponsor-contributed equity will be used to fund the acquisition of Atlantic Aviation by KKR & Co. Inc. for $4.5 billion. Ratings on existing debt under Atlantic Aviation FBO, Inc.'s term loan and revolving credit facilities will be withdrawn upon its retirement, which Moody's expects to occur concurrent with the closing of the acquisition.

The outlook is stable.

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