Moody's: W3 Holdings loan B2

Moody's Investors Service said it assigned B2 (LGD 3, 31%) ratings to W3 Holdings, Inc.'s proposed $275 million first-lien senior secured credit facilities, along with a B2 corporate family rating and B3 probability of default rating.

The proceeds will help finance the leveraged purchase of Total Safety U.S., Inc. by affiliates of Warburg Pincus, Moody's said, and refinance existing bank debt.

The outlook is stable.

The credit facilities consist of a $40 million senior secured revolving credit facility due 2016 and $235 million senior secured term loan due 2018.

In August, Total Safety entered into a definitive agreement to be acquired by Warburg Pincus for about $485 million. The transaction is expected to be funded with proceeds from a new $235 million first-lien senior secured term loan and an equity contribution from the new private equity sponsor and management.

A $40 million revolver is expected to be undrawn at closing.

The transaction will result in an increase in debt of about $85 million and a higher interest burden relative to the company's current capital structure, Moody's said.

The ratings are constrained by the company's small size, exposure to cyclical energy end markets and prospects for additional acquisition activity that could limit cash flow generation, the agency said.

The ratings favorably consider the non-discretionary nature of safety services, competitive advantages derived from operating on-site at customer locations and good liquidity, Moody's said.

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