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Moody’s raises Zellis, rates loans B3
Moody's Investors Service said it upgraded Zellis Holdings Ltd.'s corporate family rating to B3 from Caa1 and the probability of default rating to B3-PD from Caa1-PD. Concurrently, the agency assigned B3 ratings to the new £350 million senior secured first-lien term loan B2 and the £40 million senior secured first-lien revolving credit facility. Moody’s also changed the outlook to stable from positive.
On Tuesday, Zellis launched the syndication for a new £350 million senior secured term loan B2 due in January 2028 and the £40 million senior secured revolver due in April 2026.
“The upgrade reflects the company's strong operating performance over the past two years, which supported the reduction in Moody's adjusted leverage to 6.1x in the 12 months that ended in September 2023 from 7x in fiscal 2022 (ending in April), as well as the improved liquidity profile following the proposed amend and extend (A&E) transaction,” the agency said in a statement.
Zellis will use the loans to repay in full the credit facilities, including the £293 million senior secured first-lien term loan B due in January 2025, the £27.5 million senior secured second-lien term loan due in January 2026 and the £40 million senior secured first-lien revolver, currently drawn by £11 million.
“If executed, the envisaged deal will significantly improve the company's liquidity and remove any short-term refinancing risk,” Moody’s said in a press release.
“The stable outlook reflects Moody's expectations that the company will continue to improve its operating performance leading to a progressive reduction in leverage over the next 12-18 months. The stable outlook also assumes that Zellis will continue to generate positive free cash flow and will maintain an adequate liquidity,” the agency said.
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