Moody’s rates Mitchell facilities B1, Caa2

Moody's Investors Service said it affirmed Mitchell International, Inc.'s B3 corporate family rating and B3-PD probability of default rating, and assigned ratings to Mitchell's proposed senior secured credit facilities, including B1 ratings to a $75 million first-lien revolving credit facility and a $1,005,000,000 first-lien term loan (which includes a $75 million delayed-draw term loan); and a Caa2 rating on a $450 million second-lien term loan.

Proceeds of just over $1.4 billion from the new debt issuance, plus $26 million of balance sheet cash, are expected to be used to pay off $1 billion of existing debt, fund a $381 million dividend to Mitchell's equity owners and pay for transaction fees and expenses.

Moody's noted that, given the weak positioning of the first-lien debt at the B1 rating, only a small amount of incremental first-lien debt (or a similarly small reduction in second-lien debt) would likely result in a downgrade of the first-lien facilities.

The agency said it expects that, upon closing of the transaction, scheduled for late November, it will withdraw the ratings of Mitchell's existing first- and second-lien debt.

The outlook is stable.

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