Moody’s ups Travel Leaders PDR, rates facility B2

Moody's Investors Service said it affirmed Travel Leaders Group, LLC's B2 corporate family rating and upgraded its probability of default rating to B2-PD from B3-PD.

At the same time, the agency assigned a B2 rating to the company's proposed first-lien senior secured credit facility, consisting of a $400 million term loan due 2024 and a $25 million revolving credit facility due 2022 (undrawn at close).

The outlook is stable.

Proceeds from the proposed transaction will be used to finance pending acquisitions, refinance all existing debt at Travel Leaders, pre-fund cash to the balance sheet for future acquisitions and pay associated fees and expenses.

"The affirmation of TLG's B2 CFR considers the company's track record of successfully integrating tuck-in acquisitions, its stable revenue and EBITDA growth, good operating margins, as well as our expectation that the company will continue to generate solid cash flows and sustain its debt-to-EBITDA leverage below 5.0 times over the next 12-18 months," Moody's analyst Oleg Markin said in a news release.

"The levering up of the company's balance sheet to fund acquisitions is consistent with the company's acquisitive growth strategy. However it does entail integration risk given the size and number of pending acquisitions. The increased debt burden will also weaken the company's credit profile in the near-term."

The B2-PD probability of default rating, at the same level with the corporate family rating, reflects the covenant-lite structure of the company's first-lien credit agreement, the agency explained.

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