Moody’s rates JFL, loans B2

Moody's Investors Service said it assigned first-time ratings to JFL-Tiger Acquisition Co., Inc., parent holding company of Heritage-Crystal Clean, Inc., including a B2 corporate family rating and B2-PD probability of default rating. The agency also assigned a B2 rating to the company's planned senior secured first-lien credit facilities, comprising a $600 million term loan and $100 million revolving credit facility. Finally, Moody's assigned a stable outlook.

“The ratings reflect HCCI's good market position in the markets for its specialty waste environmental services, benefiting from a national footprint with a facility network, processing capabilities and difficult-to-obtain regulatory permits that provide barriers to entry. Demand for services is partly driven by the need for customers to comply with environmental regulations. Steady demand in the environmental services (ES) segment, anchored by contracts with a high customer retention rate (91%), provides a recurring revenue base, tempering volatility impacts of HCCI's other segments,” Moody’s said in a statement.

JFL plans to use the proceeds along with a $5 million draw on the revolver at transaction close and about $586 million in new cash equity will be used to buy HCCI, including extinguishing HCCI's debt, by private equity firm J.F. Lehman & Co. The transaction is expected to close in the fourth quarter of 2023

“The stable outlook reflects Moody's expectation that positive pricing actions and supportive demand driving recurring revenue in the ES segment will help offset volume and margin pressures from weaker economic conditions as well as pricing and supply-demand headwinds in the base oil market,” Moody’s said.

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