Moody’s assigned first-time ratings to Expera Specialty Solutions, including a B3 corporate family rating (CFR), B3-PD probability of default rating, and a Caa1 rating to $178 million senior secured term loan. The outlook is positive.

Moody’s said the ratings reflect Expera’s relatively small size and scale, concentration in specialty paper products, with geographically concentrated asset base, limited vertical integration and exposure to volatile commodity pricing. Although we believe that the company will have relatively strong leverage and interest coverage metrics if integration is executed successfully, the ratings are constrained by lack of stand-alone operating history of the company in its current configuration. The ratings also reflect the company’s environmental exposures and related capital investment requirements going forward.

Moody’s notes that the proposed capital structure will include $75 million ABL revolver, which will have first lien on the company’s accounts receivable and inventory, and $178 million senior secured term loan which will have first priority lien on substantially all remaining assets of the company. The Caa1 rating on the term loan reflects lack of unsecured debt in the company’s capital structure, as well as superior position of the ABL revolver with respect to collateral package.

To read the entire Moody’s news release, click here.