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Investing.com -- Moody’s Ratings has affirmed First Advantage Corporation’s B1 corporate family rating and B1-PD probability of default rating while changing the outlook from negative to stable, citing the company’s progress in integrating Sterling Check Corp.
The ratings agency also affirmed First Advantage Holdings, LLC’s backed senior secured first-lien bank credit facilities at B1, which include a $250 million revolver expiring in 2029 and a $2,165 million term loan due 2031.
The outlook change reflects First Advantage’s solid execution in integrating Sterling’s operations following the debt-financed acquisition in October 2024. Moody’s noted that synergies have been realized faster than expected, with the company making a $70.5 million term loan repayment during 2025.
Moody’s anticipates low to mid-single digit organic revenue growth despite challenging hiring conditions, with profit margin expansion expected to drive debt/EBITDA to under 5x by the end of 2026. The current leverage stands at approximately 5.4x as of September 30, 2025.
The company’s credit profile benefits from its global market position, diversified end markets, and strong customer relationships, though it remains constrained by high leverage and corporate governance concerns related to concentrated equity ownership.
First Advantage maintains very good liquidity with $217 million in cash as of September 30 and an undrawn $250 million revolving credit facility. The company is not expected to renew its share repurchase program until reaching its net leverage target of 2x-3x, potentially in 2027.
Moody’s indicated that ratings could be upgraded if debt/EBITDA is maintained below 4x with balanced financial policies, while a downgrade could occur if debt/EBITDA remains above 5x with free cash flow/debt below 5%.
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