Moody's rates Iron Mountain note B3

Moody's Investors Service said it assigned a B3 (LGD4, 64%) rating to the proposed C$175 million senior subordinated notes due 2019 of Iron Mountain Nova Scotia Funding Co., an indirect subsidiary of Iron Mountain Inc.

The agency affirmed the corporate family and probability-of-default ratings at B2, speculative grade liquidity rating at SGL-3, revolving credit facility and term loan facility at Ba2 (LGD1, 7%) and senior subordinated notes at B3 (LGD4, 64%).

The outlook is stable.

Proceeds from the notes will be used to repay outstanding debt and for general corporate purposes.

The affirmation reflects Moody's belief that the proposed refinancing does not materially impact the credit profile of Iron Mountain.

The agency said that despite meaningful improvement over the past two years, the B2 corporate family rating continues to reflect the company's high financial leverage, the significant amount of goodwill and intangibles relative to total assets, the relatively low level of pro forma free cash flow relative to debt and the capital-intensive business the company engages in, with most revenues derived from paper document storage and related services, which require significant customized physical space.

The ratings are supported by Iron Mountain's solid interest coverage for the rating category of about 1.8x in 2006, adequate EBIT return on assets of about 7% in the same period, prominent position as a global leader in information storage and data protection, historical revenue stability, geographical diversification and low customer concentration, Moody's said.

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