Moody's rates Dynacast loan Ba2, notes B2

Moody's Investors Service said it assigned B2 corporate family and probability of default ratings to Dynacast International LLC, a B2 (LGD4, 51%) rating to the new $375 million of second-lien notes and a Ba2 (LGD1, 4%) rating to Dynacast's $25 million first-lien term loan and $50 million revolving credit facility.

The outlook is stable.

The new $375 million of notes are being co-issued by Dynacast International and Dynacast Finance, Inc. Proceeds from the second-lien notes along with funds from its term loan combined with common equity and preferred stock will be combined to finance the purchase of Dynacast Group by Kenner & Co.

The ratings reflect the company's high leverage as a result of the leveraged buyout as well as relatively weak coverage metrics, the agency said. Moody's anticipates leverage of over 4.8 times and EBIT to interest of under 1.7 times for 2011, before adjusting for the debt like characteristics of company's preferred stock.

Despite its small revenue base, Dynacast is expected to generate strong free cash flow, the agency added. Moreover, the company benefits from its significant market share within its niche of small precision die case components and wide variety of customers in numerous industries and countries.

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