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Moody's rates Affinion loan B2
Moody's Investors Service said it assigned a B2 rating to Affinion Group, Inc.'s new $1.45 billion first-lien credit facility consisting of a $1.34 billion first-lien term loan due 2022 and $110 million revolving credit facility due in 2022.
The credit facility is being offered in conjunction with the company's plans to repay all amounts outstanding under the existing first- and second-lien credit facilities due 2018 and 7½% cash payment-in-kind senior unsecured international notes due 2018.
Moody's also said it assigned a Caa3 rating to the new $532.6 million senior unsecured PIK toggle notes due 2022 that are being issued as part of the company's debt exchange offer for the remaining 2018 notes.
The agency also said it assigned a Caa1 corporate family rating and Caa1-PD probability of default rating to Affinion Group, which will be the borrower under the new credit facility and unsecured notes.
Moody's also said it assigned a speculative grade liquidity rating of SGL-3.
The outlook is stable.
While the refinancing transactions address the immediate concerns about the company's liquidity stemming from the maturity of all its existing debt in 2018, they further increase in Affinion's leverage and total interest burden at a time when the company is facing operating challenges in sustaining revenue and earnings growth.
The refinancing will provide Affinion with additional time to execute its plans to stabilize and grow the business, Moody's said, but the new financing creates a significant interest burden that does not alleviate concerns about the sustainability of the company's capital structure and a potential need to right size the balance sheet in the medium term.
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