Moody's rates Tivity loans B1

Moody's Investors Service said it assigned a B1 corporate family rating and B1-PD probability of default rating to Tivity Health, Inc.

Moody's also said it assigned B1 (LGD 4) ratings to the company's proposed credit facilities.

The facilities include a $125 million senior secured revolving credit facility, $400 million senior secured term loan A and $780 million senior secured term loan B.

Moody's also said it assigned a speculative grade liquidity rating at SGL-1.

The proceeds will be used to acquire Nutrisystem, Inc. for $1.3 billion.

The proceeds will also be used to refinance existing debt and to pay fees and expenses.

The outlook is stable.

The ratings on the senior secured credit facilities, including the revolver and term loans, are the same as the corporate family as they represent the preponderance of debt in the capital structure, the agency said.

The ratings reflect Tivity's high financial leverage that is estimated to be about 5x following close of the transaction, Moody's said.

The ratings also consider significant execution risk as the acquisition of Nutrisystem will double the company's revenues, the agency added.

The ratings also take into account the revenue concentration that the company's Silver Sneaker program has to large health insurance companies that reimburse it for its services, Moody's explained.

This transaction also adds a high level of cyclicality and seasonality to Tivity Health that is not currently in existence, the agency said.

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