Moody’s rates Duke Finance loans Ba3, B3

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Duke Finance, LLC, an indirect subsidiary of OM Group, Inc.

Concurrently, the agency assigned a Ba3 rating to Duke's senior secured first-lien facilities and a B3 rating to its senior secured second-lien term loan.

The outlook is stable.

OM, the ultimate holding company in the corporate structure, is being broken into two separate entities and being sold to separate buyers. The acquired three segments will represent the pro-forma OM. Apollo Management is to contribute over $200 million in equity as part of the funding of its purchase of three of the five current segments (magnetic technologies, battery technologies, and advanced organics) for a purchase consideration of about $790 million, including fees and expenses.

Moody’s said the Ba3 ratings on the senior secured term loan and revolving credit facility, two notches above the corporate family rating, reflect their pari passu status benefiting from the junior debt that is in a first loss position in the event of bankruptcy. The first-lien facilities are expected to be secured by all assets of the company and are expected to be guaranteed by the company's existing and future wholly owned direct and indirect subsidiaries, subject to certain exceptions.

The second-lien term loan ranks after the first-lien debt in the priority of claim waterfall and is rated B3.

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