Moody's downgrades Metrologic, rates loans B2, Caa2

Moody's Investors Service said it downgraded Metrologic Instruments, Inc.' corporate family and probability-of-default ratings to B3 from B2, assigned B2 (LGD3, 36%) ratings to the company's $170 million senior secured first-lien term loan and $35 million revolving credit facility and a Caa2 (LGD5, 86%) rating to its $75 million senior secured second-lien term loan.

The outlook is stable.

Proceeds from the loans were used to refinance $125 million of first-lien debt and $75 million of second-lien debt and to repurchase about $40 million of stock.

The agency said the downgrade reflects Metrologic's aggressive financial policy of increasing its leverage to repurchase stock less than six months after the initial ratings were assigned and that the company's ratings and outlook could be further revised downward over the next year if Metrologic is unable to meaningfully reduce its adjusted leverage or if it implements any additional financially aggressive policies.

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