Moody's gives GCG, loans B2

Moody's Investors Service said it gave GCG Holdings, LLC a B2 corporate family rating, a B2-PD probability of default rating and B2 ratings to its planned five-year first-lien $100 million revolver, five-year delayed-draw first-lien $200 million term loan A and first-lien $450 million term loan B.

“The B2 corporate family rating considers GCG's relatively strong pro forma and projected credit metrics–pro forma debt to EBITDA is 2.8x. Moody's expects debt to EBITDA will drop closer to 2x in the next 12-18 months, which speaks to the company's financial policy,” the agency said in a press release.

However, GCG's small size in terms of revenue, narrow product focus, very significant customer and geographic concentration, and relatively lite proposed covenant structure are credit concerns, Moody’s noted.

The proceeds, including a $50 million initial draw on the $100 million revolver, will be used to refinance $310 million of debt and consolidate ownership of various GCG affiliates by buying out the minority interest portion of the affiliates for $391 million.

The outlook is stable.

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