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Moody's rates Gem loans B2, Caa2
Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Gem Acquisitions, Inc., the indirect parent of Genex Holdings, Inc.
Moody's also said it assigned ratings to new credit facilities that Gem is issuing in connection with a pending buyout of the company sponsored by private equity firm, Stone Point Capital.
The agency said it assigned B2 (LGD 3) ratings to the Gem's $50 million five-year first-lien senior secured revolving credit facility and $365 million seven-year first-lien senior secured term loan, and a Caa2 (LGD 5) rating to its $120 million eight-year second-lien senior secured term loan.
The proceeds from these borrowings, plus new and rollover equity, will be used to buy out existing shareholders, repay existing debt and pay related fees and expenses, Moody's said.
The parties expect to complete the transaction by mid-March, the agency said.
The outlook is stable.
The ratings reflect the company's strong market position in workers-compensation case management and related medical cost-containment services, along with its national network of nurses and case managers and record of stable revenues, Moody's said.
The managed care business provides Genex with recurring fee income from multi-year contracts with clients, the agency said.
These strengths are offset by the company's aggressive financial leverage and limited fixed-charge coverage, exposure to cyclicality in the workers-compensation insurance market and integration and contingent risks associated with acquisitions, Moody's said.
The rating outlook for the company is stable.
When the transaction closes, Moody's will withdraw Genex's existing ratings, as the existing credit facilities will be repaid/terminated.
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