Moody's rates Target Hospitality notes B2

Moody's Investors Service said it assigned first-time ratings to Arrow BidCo LLC, an indirect subsidiary of publicly traded Platinum Eagle Acquisition Corp.

Moody's said it assigned a B1 corporate family rating, B1-PD probability of default rating, B2 on its proposed senior secured notes due 2024 and SGL-2 speculative grade liquidity rating.

The outlook is stable.

On Nov. 13, 2018, Platinum Eagle announced the acquisition of Target Logistics Management, LLC and RL Signor Holdings, LLC, both currently privately held and controlled by affiliates of financial sponsor TDR Capital, LLP for total purchase consideration of about $1.4 billion, including the proposed notes and an unrated $125 million ABL facility due 2023.

Platinum Eagle is a special purpose acquisition company and will change its name to Target Hospitality Corp. after the acquisitions are completed, Moody's said.

The agency said it anticipates TDR will control Target Hospitality immediately after the acquisitions close, but that it may seek to reduce its ownership stake rapidly through one or a series of registered or unregistered secondary share sales.

The ratings reflect Target Hospitality's lack of an operating history as a consolidated entity, niche operating scope and high customer concentration, Moody's said.

The agency said it expectations for modest financial leverage, high rates of profitability and financial policies emphasizing the use of its free cash flow to invest in new and expanded lodge sites.

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