Moody’s rates Imperial Dade loans B3, Caa2

Moody's Investors Service said it assigned ratings for BCPE Empire Holdings, Inc. (Imperial Dade), including a B3 corporate family rating, B3-PD probability of default rating, a B3 rating to its senior secured first-lien term loan and delayed draw term loan, and a Caa2 rating to its senior secured second-lien term loan and delayed-draw term loan.

The outlook is stable.

Imperial Dade will use the proceeds from the debt offerings along with a $550 million cash equity contribution to finance Bain Capital's proposed acquisition of a majority stake in the company in a transaction valued at about $1.54 billion.

“Imperial Dade is well situated in the foodservice and janitorial/sanitation specialty distribution space, growing at a healthy clip both organically and through acquisitions, and the company generates strong margins for a distributor,” Brian Silver, Moody's vice president and lead analyst for the company, said in a news release.

“However, the company's ratings largely reflect its high financial leverage, which we estimate to be more than 7.5 times debt-to-EBITDA pro forma for the LBO, and our view that free cash flow generation will be suppressed, in large part from the company's substantial annual interest expense burden.”

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