Moody’s: Zep revolver, loan B2

Moody’s Investors Service said it assigned a first-time B3 corporate family rating to Zep Inc.

Moody’s also said it assigned a B2 (LGD 3) rating to Zep’s $42.5 million first-lien revolving credit facility due in 2020 and $360 million first-lien term loan due in 2022.

The proceeds will be used to fund the acquisition of Zep by New Mountain Capital LLC and repay existing debt.

The outlook is stable.

The ratings reflect the company’s very high degree of financial leverage, expectations of low revenue growth over the next couple of years and event risk related to private equity ownership, including shareholder distributions and debt-funded acquisitions, Moody’s said.

These negative factors are somewhat offset by end-market diversification and relatively stable earnings, the agency said.

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