Moody's rates RGIS loans Ba3

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to RGIS Holdings, LLC and Ba3 (LGD3, 30%) ratings to its $75 million senior secured revolving credit facility due 2013 and $500 million senior secured term loan due 2014

The outlook is stable.

The loans are being entered into in connection with the sale of a majority share of RGIS' equity to the Blackstone Group and GS Mezzanine Partners, and proceeds will be used to retire the existing preferred equity (including the accrued, payment-in-kind dividend accretion), to repay existing senior bank debt and to pay transaction fees and expenses.

The agency said the B2 corporate family rating primarily reflects the company's high leverage, modest free cash flow and weak interest coverage resulting from the releveraging of the company's balance sheet to effect the sale of a controlling interest in the company to Blackstone Group and GS Mezzanine Partners.

Factors that serve to mitigate the above concerns include the company's leading market share as the largest outsourced inventory verification provider in the United States, the company's solid customer retention rate, its highly variable cost structure and its solid new business win rate, Moody's said.

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