Moody’s rates Paragon loans B2, Caa2

Moody’s Investors Service said it gave B2 ratings to Secure Acquisition Inc.’s (Paragon Films) expected first-lien senior secured credit facility, consisting of a $45 million revolver, a $300 million term loan and a $45 million delayed-draw term loan, and a Caa2 to the planned $100 million second-lien senior secured term loan.

Concurrently, the agency assigned Paragon a B3 corporate family rating and B3-PD probability of default rating.

Term loan proceeds and common equity will be used to finance the acquisition of Paragon by private equity sponsor Rhone Group and pay related fees and expenses.

“Paragon's B3 CFR reflects the company's small scale, single product portfolio, and customer concentration. Pro forma the acquisition by private equity sponsor, Rhone Group, leverage is high at an estimated 7.5x, but expected to improve to about 6.2x by year end 2022 through organic growth. Execution risk is elevated as the company plans to build out capacity to serve market demand, resulting in a decline of free cash flow from a higher capital expenditure spend over the near term. However, we expect these investments to improve free cash flow once completed,” Moody’s said in a press release.

The outlook is stable.

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