Moody’s rates LegalShield facilities B1, Caa1

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to Trident LS Merger Sub Corp. (LegalShield), which will be merged into Pre-Paid Legal Services, Inc. following the closing of the leveraged buyout of the company.

At the same time, Moody's assigned a B1 rating to LegalShield's proposed first-lien senior secured credit facilities, consisting of a $550 million term loan due 2025 and a $50 million revolver expiring in 2023, and a Caa1 rating to the company's proposed $150 million second-lien term loan due 2026.

The outlook is stable.

The agency said the transaction reflects the company's aggressive financial policies given the significant increase in pro forma Moody's-adjusted debt to EBITDA to 6.4 times from about 4.3 times at Dec. 31, 2017.

Pro forma EBITA to interest coverage declines to about 2 times from 2.4 times but remains solid and in line with the B2 rating category, the agency added.

“In our view, the credit metrics resulting from this transaction position LegalShield well within the B2 rating category given the company's operating scope,” Moody’s said in a news release.

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