Moody's rates Wyle loans Ba3

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to Wyle Holdings, Inc. and Ba3 (LGD3, 31%) ratings to the proposed $200 million senior secured first-lien term loan due 2014 and $30 million senior secured first-lien revolver due 2014 of Wyle Laboratories, Inc. and RSIS LLC.

The outlook is stable.

Wyle recently agreed to acquire RSIS. Including the refinancing of some Wyle debt, the transaction will be financed with the new term loan, an unrated $50 million senior secured second-lien term loan held by a financial sponsor, $31.5 million of unrated holding company subordinated notes held by RSIS' selling shareholders and total equity of about $50 million.

The agency said the B2 corporate family rating is constrained by integration risks related to the acquisition of RSIS, uneven revenue and profitability trends at RSIS and the potential for reduced spending or delays in funding of government contracts.

The ratings are supported by revenue visibility provided by long-term contracts, funded backlog of over $300 million, historically high recompete win rates when Wyle is the prime contractor and the company's long-standing relationships with its largest government clients, Moody's said.

The pro forma debt-to-EBITDA ratio is about 5.1 times.

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