Moody's rates ADMI add-on B2

Moody's Investors Service said it gave a B2 rating to ADMI Corp.’s planned $700 million add-on first-lien senior secured term loan.

Moody’s also changed the outlook to negative from stable and affirmed its B2 corporate family rating, B2-PD probability of default rating, and B2 ratings on the first-lien senior secured term loan and first-lien senior secured revolving credit facility.

“The rating actions follow the announced incremental $700 million term loan which combined with $150 million of cash from the balance sheet will be used to fund a $835 million distribution to shareholders,” the agency said in a press release.

The negative outlook reflects the more aggressive nature of ADMI's financial policies, a key governance issue, the agency noted.

“ADMI will be meaningfully increasing leverage to fund a very large shareholder distribution, which come only six months after the increased leverage to fund the $1.135 billion acquisition of ClearChoice. Leverage, pro-forma for the distribution and a full year of ClearChoice, rises to 7.4x. Combined with higher initial gross financial leverage, and the use of a significant portion of its cash balances to fund the distribution, there is a greater risk that debt/EBITDA will remain above 6x beyond the next 12-18 months,” Moody’s said.

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