The company generated pro forma revenue of approximately $659 million for the twelve months ended September 30, 2021.
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SVP's $30 million revolving credit facility expiring in 2025 (undrawn at the close of the transaction) will provide additional liquidity.Headquartered in Birmingham, Alabama, Southern Veterinary Partners, LLC ("SVP") is a national veterinary hospital consolidator, offering a full range of medical products and services, operating 280 general practice locations across 18 states.
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This, together with free cash flow of about $60 to $70 million over the next 12 months, provide sufficient coverage for the required 1% mandatory amortization of its first lien term loan of approximately $10 million, annually. The credit profile is also supported by the company's good liquidity, with about $79 million of cash, pro forma for the add-on and DDTL, as well as planned acquisitions. Moody's also said that there is very limited cushion for additional first lien debt at the existing B2 rating on the senior secured credit facilities.Moody's notes that the company has a track record of successfully integrating acquisitions, which supports the credit profile despite the aggressive acquisition pace. Further, Moody's expect SVP will remain acquisitive and is likely to fund future acquisitions at least partly with incremental debt. Moody's estimates debt/EBITDA will rise to approximately 9.1x (pro forma for the term loan add-on, DDTL, and acquired business under letter of intent), as of September 30, 2021, up from approximately 8.1 times, on Moody's adjusted basis.
The debt financed transaction is credit negative, as it raises leverage and will increase the company's annual interest burden by approximately $10 million annually. The ratings outlook remains stable.Proceeds from the term loan add-on along with balance sheet cash will be used to fund acquisitions under letters of intent, and pay related fees. The ratings include the B3 Corporate Family Rating, B3-PD Probability of Default Rating, B2 ratings on its senior secured first lien credit facilities, and Caa2 ratings on the company's second lien debt. Announcement: Moody's says SVP's proposed $100 million term loan add-on and $100 million delayed draw term loan to finance acquisitions are credit negative no ratings impactGlobal Credit Research - New York, Decem- Moody's Investors Service ("Moody's") said today that Southern Veterinary Partners, LLC's ("SVP") $100 million term loan add-on, along with its new $100 million delayed draw term loan ("DDTL") used to finance acquisitions are credit negative, but have no impact on the company's ratings.
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