Cooper Gay downgrade threat remains despite North America sale

Moody’s is continuing to review Cooper Gay Swett & Crawford’s ratings for a downgrade despite the broking group’s plans to sell its North American operations.

The rating agency said Cooper Gay plans to use the proceeds from the sale of its North American operations to repay its debt.

The broking group’s indebtedness is one of the main reasons Moody’s first placed the ratings under review back in July this year.

But Moody’s said there was uncertainty about the timing and ultimate proceeds from the sale of the North American division, which it described as Cooper Gay’s “strongest business unit”.

The agency said a favourable sale would allow Cooper Gay to repay most of its debt. It added: “If the facilities were fully repaid and terminated, the rating agency would withdraw the company’s ratings.”

Moody’s said its continuing review would focus on the sale process, including the operating performance of the North American business; market conditions in property and casualty specialty lines; and the availability of funding for potential buyers.

The rating agency will also consider CGSC’s progress on expense reduction and other strategic initiatives to enhance profitability.

Cooper Gay’s debt includes a $75m (£49m) revolving credit facility that expires in April 2018, a $305m term loan due for repayment in April 2020 and a $120m term loan due in October 2020.

It is thought that selling the North American business could fetch up to $600m for Cooper Gay, which would allow it to pay off all of these facilities.

Moody’s currently assigns a B3 group debt rating to Cooper Gay Swett & Crawford. It rates the $75m revolving credit facility and the $305m term loan at B2 and the $120m term loan at Caa2.