Moody's gives UST, loans B1

Moody's Investors Service said it gave first-time ratings to UST Holdings Ltd., including a B1 corporate family rating and a B1-PD probability of default rating. The agency also assigned B1 instrument ratings to the first-lien senior secured credit facilities issued by UST Global Inc. and various co-borrowers, which include a new $125 million first-lien senior secured revolving credit facility and a new $400 million first-lien senior secured term loan.

“The B1 corporate family rating reflects UST's modest scale and scope relative to larger information technology (IT) services providers. Thin EBITDA margins and low free cash flow to debt metrics also constrain the credit. Larger IT providers leverage scale to optimize the mix of onshore and offshore resources and manage workforce utilization rates, resulting in higher profitability,” Moody’s said in a press release.

Term loan proceeds will be used to refinance $153 million of debt and provide $247 million of cash to the balance sheet for general corporate purposes, including M&A.

The outlook is stable.

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