Moody's assigns Duravant facilities B2

Moody's Investors Service assigned a B2 rating to Engineered Machinery Holdings, Inc.'s (Duravant) planned $1.135 billion senior secured first-lien term loan. As a part of the transaction, the company is also increasing the size of its senior secured second-lien term loan to $550 million from $175 million.

The company's corporate family rating of B3, probability of default rating of B3-PD, euro-denominated first-lien term loan rating of B2 and Caa2 rating on the senior secured second-lien term loan remain unchanged.

Proceeds, along with $41 million of cash, will be used to refinance facilities, fund a $275 million shareholder distribution and pay associated fees and expenses.

"The significant shareholder dividend follows closely after the company's recent acquisition of Foodmate, elevating financial and execution risk," said Shirley Singh, Moody's lead analyst of the company, in a press release. "Leverage will increase above 7x on pro forma basis, but our expectation of solid earnings growth, continued positive free cash flow and good liquidity supports the ratings", added Singh.

The outlook is stable.

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