Advisor Group will finance its acquisition of Ladenburg Thalmann with new first-lien debt, rolled Ladenburg unsecured notes, and new equity from Reverence Capital. We view the company's financial policy as aggressive as denoted by its negative tangible equity, pro forma debt service coverage clearly below 2x and debt to EBITDA leverage that will be around 8x (excluding planned synergies and certain EBITDA add-backs). We are lowering our issuer credit rating on Advisor Group to 'B' from 'B+'. We are also removing the rating from CreditWatch, where we placed it with negative implications in November. At the same time, we are lowering our existing first-lien rating to 'B' and senior unsecured rating to 'CCC+'. We are also assigning a 'B' rating
