Moody's lifts Earle M. Jorgensen notes to Ba3

Moody's Investors Service said it upgraded Earle M. Jorgensen Co.'s $250 million 9¾% senior secured notes to Ba3 from B1 and confirmed the company's Ba3 corporate family rating. The outlook is stable, and this concludes the review begun in January.

The upgrade is related to the merger of Earle M. Jorgensen and Reliance Steel & Aluminum Co., which closed on April 3. As part of the merger agreement, the company's $300 million secured revolving credit facility was terminated and a new revolving credit facility was established with Reliance as the lender. The new revolver is for $80 million, but Moody's said availability could be limited by the amount that is permitted to be drawn under Reliance's $700 million credit facility.

Moody's said the ratings reflect the relatively high and stable margins associated with Earle M. Jorgensen's core bar and tubular products, a diverse mix of customers served by its broad North American metals distribution network and the relative stability of the metals distribution business.

The ratings are constrained by fluctuating demand and prices for metals, the cyclicality of the end markets that consume metals and risks related to parent company Reliance, including merger integration risk, the agency said.

Reliance's debt will be $1.1 billion pro forma for the merger, or 2x pro forma EBITDA.

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