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Moody's rates Amscan loan, notes
Moody's Investors Service said it assigned a B1 rating to Amscan Holdings Inc.'s proposed $250 million senior secured credit facilities and a B3 rating to its proposed $175 million senior subordinated notes.
Specifically, Moody's assigned a B1 rating to Amscan's $50 million new senior secured revolving credit facility due 2010 and $200 million senior secured term loan B facility due 2012. Moody's assigned a B3 rating to the company's $175 million senior subordinated notes due 2014. The senior unsecured issuer rating was lowered to Caa1 from B2.
In addition, Moody's confirmed Amscan's B1 senior implied rating. The outlook is stable.
The ratings confirmation concludes the review for possible downgrade that was initiated on April 2 following the announcement that Amscan had signed a definitive acquisition agreement with affiliates of Berkshire Partners and Weston Presidio.
Moody's said the material increase in leverage associated with this transaction, as well as the company's ongoing exposure to concentration and volatility in the party superstore channel, leaves the ratings weakly positioned in their rating categories.
Nonetheless, the rating action also recognizes the modest impact on free cash flow associated with the transaction (which is expected to facilitate ongoing debt reduction), the relatively steady operating track record of the retained management team, and the company's strong market positions.
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