Moody’s: TricorBraun CFR B3, loans B2, notes Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to TCB Holdings III Corp. (TricorBraun Holdings Inc.).

The agency also assigned a B2 rating to the first-lien credit facilities and a Caa2 rating to the second-lien notes.

The outlook is stable.

Proceeds from the new facilities will be used to finance the acquisition of rigid packaging distributor TricorBraun by AEA Investors from CHS Capital as well as pay fees and expenses associated with the transaction.

The purchase price is supported by an undisclosed equity investment by AEA Investors. The transaction is expected to close in November.

Initially, the rating is expected to be assigned to TCB Holdings III and then to TricorBraun upon closing.

Moody’s said the assignment of the B3 corporate family rating (effective one-notch downgrade) reflects the deterioration in credit metrics and increase in interest expense pro forma for the proposed transaction.

The company is expected to continue to generate good free cash flow due to its business model despite the increase in interest expense and has pledged to direct it to debt reduction over the rating horizon.

However, credit metrics are expected to remain within the rating category, the agency added.

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