Moody's rates new Ionics facility B1

Moody's Investors Service said it has assigned a B1 rating to Ionics Inc.'s $75 million senior secured revolving credit facility due 2009 and $175 million senior secured term loan B due 2011.

The outlook is stable.

Proceeds from the term loan, together with $55.5 million of the company's cash on hand and about $147.5 million of Ionics' stock, will be used to fund the acquisition of The Ecolochem Group, a privately held company providing emergency mobile water treatment services to power, petrochemical and other markets. The purchase price is $362.5 million, or 9.1 times Ecolochem's adjusted EBITDA.

Moody's said the acquisition combines Ionics' water treatment equipment manufacturing expertise and technology with Ecolochem's leading market position in emergency and mobile water treatment services.

However, Moody's said the ratings are constrained by Ionics' poor track record of financial and operating performance, the substantial contingent liabilities related to its project finance activities, and considerable volatility and low margins in its equipment sales business.

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