Moody's rates PECF B3, loans, notes B2, notes Caa2

Moody's Investors Service said it assigned PECF USS Intermediate Holding III Corp. (United Site Services) a B3 corporate family rating and B3-PD probability of default rating. Moody's also gave B2 ratings to the company's planned $1.35 billion first-lien senior secured credit facility, including a $100 million five-year revolving credit facility and a $1.25 billion seven-year term loan, and $550 million of senior secured notes due 2028, and a Caa2 rating to the expected $750 million of senior unsecured notes due 2029.

Platinum Equity GP, an affiliate of private equity sponsor Platinum Equity, LLC, the controlling shareholder of United Site Services, along with its new Platinum Equity Capital Partners V, will raise a continuation fund vehicle that will acquire interests in USS from Platinum Equity Capital Partners Fund IV, an affiliated investment fund of Platinum, and other investors for a purchase price of $3.75 billion, the agency said.

As part of the deal, Platinum GP, along with its affiliated Fund V and new investors, collectively LPs, will fund and roll at least $1.4 billion of equity. Platinum GP and the new investors will also deliver $200 million of unfunded capital commitments.

"USS' very high pro forma leverage above eight times is partly mitigated by anticipated free cash flow and anticipated deleveraging through revenue growth and strong EBITDA margins in a low 30s percentage range," said Oleg Markin, a Moody’s assistant vice president, in a press release.

Proceeds from the debt raise and equity will be used to refinance USS’ indebtedness, buy equity interests in the company and pay related fees and expenses.

After deal closes, Platinum GP will keep controlling ownership in the company and most of the board seats. The company will also enter a new, unrated $200 million asset-based lending revolving credit facility due 2026. Moody's said it expects both revolving credit facilities will be undrawn at close.

The outlook is stable.

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