Moody’s rates Deluxe Entertainment loan B3

Moody's Investors Service said it affirmed Deluxe Entertainment Services Group, Inc.'s B3 corporate family rating and B3-PD probability of default rating.

Moody's also assigned a B3 rating to the proposed $429 million senior secured term loan maturing February 2022.

The outlook was changed to stable from negative.

Deluxe recently announced plans to spin-off its creative services division for a valuation of roughly $900 million enterprise value.

The division will become a standalone entity and capitalized initially with debt and new cash equity sufficient to fund a shareholder distribution to Deluxe of $500 million, which in turn will use the funds, plus equitization of debts owed to the sponsor, to reduce existing debt by $572 million, among other things.

The company will also seek to amend the existing credit agreements to downsize the asset-based facility, tighten provisions and extend debt maturities by two years.

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