Moody's may up Darling

Moody's Investors Service said it placed Darling International, Inc.'s Ba3 corporate family and probability of default ratings, Ba2 (LGD 3, 33%) $325 million revolving credit facility due 2015 and $60 million senior secured term loan B due 2016, and B2 (LGD 5, 86%) $250 million of senior notes due 2018 under review for possible upgrade.

The review for upgrade is supported by the company's material debt repayment in the first quarter of 2011 following its $293 million equity offering, expectations for stronger than anticipated financial performance in 2011 alongside what appears to be a relatively smooth integration process of Griffin Industries, the agency said.

As a consequence, along with the increase in the revolving credit facility, the speculative-grade liquidity rating was upgraded to SGL-1 from SGL-2.

The Griffin acquisition closed on Dec. 17, 2010 and was very near in size to Darling with mostly complementary locations, the agency added.

The review will primarily focus on the completion of the integration process with Griffin and the forward view of the company's financial performance over the commodity cycle, Moody's said.

The ratings reflect Darling's attractive profitability and cash flow operating performance despite volatility from commodity prices and fluctuations in raw material, significant scale in rendering and recycling for the food industry and its critical role in the waste handling process, the agency added.

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