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Moody's upgrades DI Purchaser, rates loans Caa1, Caa2
Moody's Investors Service said it upgraded DI Purchaser, Inc.'s corporate family rating to Caa1 from Caa3 and probability of default rating to Caa1-PD from Caa3-PD, along with senior secured first-lien term loan due 2021 to Caa1 (LGD 3) from Caa3 (LGD 4) and senior secured second-lien term loan due 2022 to Caa2 (LGD 5) from Ca (LGD 5).
The ratings on these instruments will be withdrawn following the successful completion of the proposed amendments.
Moody's also said it assigned a Caa1 (LGD 3) rating to the company's proposed amended senior secured first-lien term loan due in December 2023 and Caa2 (LGD 5) to the senior secured second-lien term loan due in December 2024.
The outlook remains stable.
The upgrades reflect the company's extended debt maturities, improving fundamentals and declining leverage, the agency said.
As part of a bolt-on-acquisition, DI is expected to amend its credit facilities to push out maturities by two years, as well as conserve cash with a PIK feature on its second-lien term loan, Moody's said.
Pro forma for the transaction, the agency said it projects debt-to EBITDA to decline to 7.1x at year-end 2019, compared to 7.6x at year-end 2018.
This improvement is the result of higher earnings from the transaction, organic growth, cost-saving initiatives already put in place during 2017 and 2018 and the equity injection from DI's private equity owner, which limits the amount of debt that would have otherwise been added to complete the acquisition, Moody's said.
The stable outlook reflects an expectation that the company's liquidity will remain adequate and operating fundamentals will continue to improve, the agency said.
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