Moody's affirms TransFirst

Moody's Investors Service said it affirmed TransFirst Holdings, Inc.'s B3 corporate family rating following its announced plans to acquire Solveras, Inc.

The agency affirmed the senior secured revolving credit facility due 2013 at B2 (LGD3, 33%), senior secured first-lien term loan due 2014 at B2 (LGD3, 33%) and senior secured second-lien term loan due 2015 at Caa2 (LGD5, 84% from 85%).

The outlook is stable.

The company said it plans to finance the acquisition with cash, borrowings under the revolver and equity contributions from its sponsor.

The acquisition of Solveras will have a modestimpact on TransFirst's credit profile as the size of the acquisition is small relative to TransFirst's revenues and transaction volumes, Moody's said.

"The largely cash-financed transaction will erode the company's liquidity in the short term and according to our estimates will reduce TransFirst's operating cushion under its leverage covenant to very modest levels initially, partly as a result of the step down in the covenant level at the end of the current quarter," Moody's Analyst Raj Joshi said in a statement.

The B3 rating reflects TransFirst's high leverage at about 6.3 times, incorporating adjustments, and its modest free cash flow generation, Moody's noted.

The B3 rating is constrained by the potential for periodic increases in leverage resulting from debt-funded acquisitions or dividends to financial sponsors and the company's aggressive financial leverage policies, including tolerance of tight headroom under its financial leverage covenant, the agency said.

The B3 rating is supported by the expectations of declining leverage and growing cash flows from operations resulting from good business execution and a modestly growing economy, Moody's said.

The rating benefits from the predictability of TransFirst's operating cash flows generated from recurring transactions and a highly diverse customer base with low customer or industry concentration, the agency noted.

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