Moody’s rates Richmond UK CFR B2, loans B1

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Richmond UK Holdco Ltd.

Concurrently, the agency assigned B1 instrument ratings to the proposed £575 million first-lien term loan due 2024 and the £100 million first-lien revolving credit facility due 2023, to be co-borrowed by Richmond UK Bidco Ltd. and Richmond Cayman LP.

The outlook is stable.

As part of the transaction, there will also be a £150 million second-lien term loan issuance due 2025, which is unrated. Richmond UK Holdco, a newly incorporated entity, is expected to be the future holding company of Parkdean Resorts and the topco entity of the new proposed restricted group.

Proceeds from the first- and second-lien loans plus proceeds from a £150 million ground rent transaction and £544 million of sponsor equity from the Onex Corp. will be used to finance the acquisition of Parkdean Resorts.

Accordingly, at the same time, Moody's placed all ratings of Compass Midco Ltd., current parent and holding company of Parkdean Resorts, and Compass Holdco 2 Ltd. under review for downgrade, including its B1 corporate family rating and B2-PD probability of default rating and the ratings on the outstanding £530 million senior secured term loan B due 2022 and the £40 million revolving credit facility due 2021 borrowed by Compass Holdco 2.

If the acquisition of Parkdean Resorts by Richmond UK Holdco and the repayment of the outstanding debt instruments conclude as predicted, Moody's said it would expect to withdraw all ratings of Compass to reflect the new corporate structure.

Moody’s said the B2 corporate family rating pro-forma for the acquisition by Onex is one notch lower than the existing rating.

“This is principally due to the anticipated increase in Moody's adjusted pro-forma leverage to 6.9x FY 2016 from 4.7x (LTM September 2016),” the agency said in a news release.

“The Moody's adjusted opening leverage has been determined on a pro-forma basis taking into account the full year impact of the intended ground rent transaction as well as the contribution from Vauxhall park which was acquired in July 2016 but excluding some one-off charges.”

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