Moody's assigns Midwest Veterinary B3

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Midwest Veterinary Partners, LLC. Moody's also assigned B2 ratings to the company's proposed first-lien credit facilities, consisting of a $20 million revolver due 2026, a $340 million term loan due 2028 and a $75 million delayed draw term loan due 2028.

“Midwest Veterinary Partners, LLC's B3 corporate family rating (CFR) broadly reflects its very high financial leverage (Moody's-adjusted debt-to-EBITDA of 9.2 times on a pro forma basis and excluding acquisitions under LOI), which Moody's expects to persist as the company continues to use debt to fund acquisitions. Moody's estimates include a number of adjustments and add-backs to EBITDA, which add a degree of uncertainty around the true underlying cash generating ability of the company,” the agency said in a press release.

Proceeds from the new first lien facility along with the proceeds from an unrated $90 million second-lien term loan will be used to refinance debt and finance future acquisitions.

The outlook is stable, reflecting the view leverage will stay high, but that its relatively stable business profile will result in sustained mid-single-digit top-line growth, along with positive free cash flow, the agency said.

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