Moody’s gives B2 to NorthStar loan

Moody’s Investors Service said it gave a B2 rating to NorthStar Group Services, Inc.'s planned $710 million backed senior secured first-lien term loan due 2028. The company also plans to secure a $125 million asset-based lending facility to replace its outstanding revolver.

All other ratings for NorthStar, including the B2-PD probability of default rating and B2 rating on its outstanding backed senior secured first-lien term loans maturing in 2026 are unchanged.

NorthStar plans to use the proceeds primarily to repay about $683 million outstanding on the company's term loans due 2026 and about $11 million drawn on its $100 million ABL expiring in 2025, as well as pay transaction fees and expenses. The company plans to draw $5 million on the new revolver at the close.

“The transaction will increase financial leverage, with Moody's expectation of pro forma adjusted debt-to-LTM EBITDA of about 4.3x at Sept. 30, 2023. However, the company is also extending debt maturities and expects to reduce annual debt amortization requirements to 1% compared to the current level of 2.5% on the existing term debt, which would step up to 5% in 2024,” the agency said in a press release.

The outlook is stable.

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