Moody's rates Evenflo loans B1, Caa1

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to WP Evenflo Holdings, Inc., B1 ratings with loss-given-default assessments of LGD3 (34%) to its $40 million senior secured revolving credit facility due 2012 and $120 million first-lien senior secured term loan due 2013 and a Caa1 (LGD5, 80%) rating to its $45 million second-lien senior secured term loan due 2014.

The outlook is stable.

WP Evenflo Holdings is a holding company that owns all the stock of Evenflo Co., Inc. Proceeds from the credit facilities, combined with $103 million of preferred and common equity, will be used to fund Weston Presidio's acquisition of the company for $268 million.

The agency said the B2 rating reflects Evenflo's leveraged profile, including an expected pro forma debt-to-EBITDA ratio of more than 7x at closing; its material qualitative risks, including substantial customer concentration, the mature nature of the juvenile/infant product category, competition from well-capitalized companies and its somewhat narrow operating margins; the potentially high cost associated with product recalls; general product liability risk; and the potential media influence on brand equity.

The rating favorably considers Evenflo's leading position as a seller of infant and juvenile products with number one and two positions in many product categories, a comprehensive product portfolio that addresses a variety of infant/juvenile needs, strong brand recognition among expectant mothers, improvements in operating performance over the last few years, long-standing relationships with key retail customers and organic growth opportunities with existing customers and internationally, Moody's said.

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