Moody's ups Rural/Metro, rates loans B2, notes Caa1, Caa2

Moody's Investors Service today assigned ratings to the proposed debt of Rural /Metro Corp. and Rural/Metro LLC, a newly created subsidiary of Rural/ Metro Corp.

Moody's rated Rural/Metro LLC's proposed $155 million senior secured credit facility B2 and proposed $140 million senior subordinated notes due 2015 Caa1 and Rural/Metro Corp.'s $50 million senior discount notes due 2016 Caa2.

The senior secured revolving credit facility due 2007 was upgraded to B2 from B3 and the senior unsecured issuer rating was cut to Caa2 from Caa1.

The proceeds from the proposed transactions will be used to refinance the existing debt of Rural/Metro.

Concurrently, Moody's upgraded Rural/Metro's senior implied rating to B2 from B3, reflecting improved operations and its return to profitability over the past few years.

The change in the outlook to stable from negative reflects Moody's expectation of continued enhancement of the ratio of free cash flow relative to total debt to the middle to upper single digits.

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