Moody's rates Indalex notes B3

Moody's Investors Service said it assigned a B3 rating to the proposed $280 million senior secured notes to be issued by Indalex Holding Corp. The notes will be guaranteed by the company's domestic subsidiaries and by parent Indalex Holdings Finance Inc. Moody's also assigned a B3 corporate family rating and an SGL-2 speculative grade liquidity rating to the company.

The outlook is stable.

This is the first time Moody's has rated Indalex, the aluminum extrusion businesses to be divested by Honeywell Inc. following its acquisition of Novar plc, the parent company of Indalex. The acquirer of Indalex, Sun Capital Partners Inc. is expected to contribute about $111 million of the $425 million purchase price. The balance, including transaction costs, will be debt financed with proceeds from the bond offering and $57 million of borrowings under a $200 million first-priority senior secured revolving bank facility, the agency said.

Moody's said the corporate family rating reflects Indalex's high degree of financial leverage, the sensitivity of earnings to volume levels, the reliance on meaningful volume increases to improve EBITDA and operating cash flow generation, increasing cost pressures and Moody's expectation that free cash flow will be negligible to negative in the early years following this transaction.

The rating also acknowledges Indalex's good market position as a major supplier of extruded aluminum products in North America and, importantly, its "pass-through" aluminum price business model, which the agency said should provide a degree of stability to earnings over time.

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