Moody's gives Project Castle, loans B3

Moody's Investors Service said it gave first-time ratings to Project Castle, Inc., including a B3 corporate family rating and a B3-PD probability of default rating. Concurrently, Moody's assigned a B3 to the planned senior secured term loan and revolving credit facility.

Term loan proceeds and equity from Thomas H. Lee Partners and the Abu Dhabi Investment Authority, will primarily be used to fund the combination of Material Handling Systems Inc. and Fortna, Inc.

The merger reflects the combination of two complimentary businesses that will generate near term synergies and improve the competitive position within the parcel, warehouse and distribution sectors. “That said, pro forma leverage at close will initially be high with Moody's adjusted debt/EBITDA above 7.5x. Moody's expects steady improvement in leverage, however, through growth in earnings,” the agency said in a press release.

The outlook is stable.

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