Moody's rates RLG B3, loans B2, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Resource Label Group (RLG Holdings, LLC). Moody's also gave a B2 to RLG Holdings, LLC's expected first- lien credit facility, consisting of a $405 term loan, a $90 million delayed-draw term loan and a $60 million revolver and a Caa2 rating to the $110 million second-lien term loan and the $15 million second-lien delayed-draw term loan.

“RLG's B3 corporate family rating reflects the company's small scale, highly competitive and fragmented market, high leverage and aggressive financial policy, which Moody's believes will include debt-funded acquisitions given the available delayed-draw term loans. The rating also reflects RLG's diverse end markets, high margins, earnings stability from high customer-retention rates, and free cash generation ability,” the agency said in a press release.

The proceeds will fund the purchase of Resource Label by Ares Management for $1.045 billion. The second-lien delayed-draw loan will be used for permitted acquisitions and other permitted uses. Pro forma this transaction, Moody's projects RLG's debt-to-adjusted LTM EBITDA (inclusive of Moody's adjustments) to be 6.9x at March 31, the agency said.

The outlook reflects an expectation of organic and disciplined growth through acquisition, Moody’s said.

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