Moody's gives Southern Veterinary loans B2, Caa2

Moody's Investors Service said it gave a B2 rating to Southern Veterinary Partners, LLC's planned $140 million first-lien term loan add-on and a Caa2 rating to its proposed $110 million incremental second-lien term loan.

The company’s B3 corporate family rating, B3-PD probability of default rating, B2 rating on its first-lien senior secured credit facilities and Caa2 rating on its second-lien debt are unchanged.

The proceeds will be used to fund acquisitions under letters of intent, pay related fees and add cash to the balance sheet.

“The debt financed transaction is credit negative, as it raises leverage and will increase the company's annual interest burden by approximately $16 million annually. Moody's estimates debt/EBITDA will rise to approximately 8.9x (pro forma for the term loan add-ons, and acquired business under letter of intent), as of March 31, 2022, up from approximately 8.2 times, on Moody's adjusted basis. Further, Moody's expects SVP will remain acquisitive and is likely to fund future acquisitions at least partly with incremental debt,” the agency said in a press release.

The outlook remains stable.

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