Moody's assigns B2 to Chromalloy, loans

Moody's Ratings said it assigned a B2 corporate family rating and a B2-PD probability of default rating to Chromalloy Corp. Concurrently, the agency assigned a B2 rating to the planned senior secured credit facility consisting of a $900 million seven-year term loan and $150 million five-year revolving credit facility. The outlook is stable.

"The assignment of the B2 CFR reflects our expectation for manageable financial leverage, adequate liquidity, and aggressive financial policies over the next 12-18 months, mitigated in part by the business' high barriers to entry and solid demand for aftermarket services and parts," said Safat Hannan, a Moody's assistant vice president and analyst, in a press release.

The term loan proceeds will be used to refinance the company's debt, fund transaction costs and add cash to the balance sheet. The senior secured revolving credit facility will double in size to $150 million from $75 million and will be undrawn at transaction close. The transaction will significantly lower interest expense and support free cash flow generation.

The stable outlook mirrors an expectation that demand for Chromalloy's aftermarket repairs and parts will stay robust and result in about $30 million of free cash flow annually over the 12-18 months, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.