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January 31, 2008 |
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NCO GROUP: Moody's Puts Ba3 Rating on US$139 Million Add-On Loan Moody's Investors Service confirmed all the credit ratings of NCO Group, Inc., concluding a review for possible downgrade initiated on Dec. 13, 2007. Moody's also assigned a Ba3 rating to the US$139 million add-on term loan B, which will be used along with a US$210 million equity contribution from One Equity Partners and its co-investors, to finance the acquisition of Outsourcing Solutions, Inc. Moody's downgraded NCO Group's speculative grade liquidity rating to SGL-3 from SGL-2 reflecting material revolver borrowings and a projected tightening of headroom under financial covenants during 2008. The rating outlook is stable. Moody's views the acquisition of Outsourcing Solutions favorably since it will be financed with a large equity component (about 60% of acquisition financing) and provides increased scale and significant cost saving opportunities. The confirmation of the B2 Corporate Family Rating reflects the company's sizeable revenue base, leading market position in the accounts receivable outsourcing industry, a large global platform of on-shore and off-shore offerings and adequate credit metrics pro forma for the Outsourcing Solutions acquisition. The ratings are constrained by economic pressures that may continue to weaken performance in the contingent collection and portfolio management businesses as well as limited business line diversity and moderate customer concentration. Moody's took these rating actions: -- Assigned US$139 million add-on term loan B, Ba3 (LGD 3, 31%) -- Confirmed US$465 million senior secured term loan due 2013, Ba3 (to LGD 3, 31% from LGD 2, 29%) -- Confirmed US$100 million senior secured revolver due 2011, Ba3 (to LGD 3, 31% from LGD 2, 29%) -- Confirmed US$165 million senior floating rate notes, B3 (to LGD 4, 67% from LGD 4, 63%) -- Confirmed US$200 million senior subordinated notes, Caa1 (to LGD 6, 91% from LGD 6, 90%) -- Confirmed Corporate Family Rating, B2 -- Confirmed Probability of Default Rating, B2 -- Downgraded Speculative Grade Liquidity rating, to SGL-3 from SGL-2 Approximately US$1.1 billion of rated debt securities affected. Headquartered in Horsham, Pennsylvania, NCO Group Inc. -- http://www.ncogroup.com/ -- provides business process outsourcing services including accounts receivable management, customer relationship management and other services. NCO provides services through over 100 offices in the United States, Canada, the United Kingdom, Australia, India, the Philippines, the Caribbean and Panama. |
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